China’s zero-Covid policies and its post-pandemic recovery efforts have strained finances at local levels, pushing debt to an all-time high this year – twice what it was in 2017 – with little help from Beijing.
Some local government owned enterprises in China have begun pulling back from funding regional projects in response to a campaign from Beijing to curb implicit liabilities, amid fears of financial contagion.
Talk of financial risk management at annual parliamentary meetings serves as a high-profile reassurance of leadership’s repeated vows to curb financial risks and alleviate revenue problems across the country.
China has begun tightening bond issuance criteria for local government financing vehicles and ordered regional governments to clear existing credit by 2028, amid growing concern about off-balance sheet debt.