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China’s local-debt crisis is about to get nasty

China's Guizhou region, which owes about $380bn and is reliant on its new roads and tunnels, is set to receive a central-government bail-out as it is at a breaking point due to its enormous debts.

  • Guizhou, a region in China, has accrued enormous debts through its building efforts which it can no longer repay.
  • The region owes about 2.6trn yuan ($380bn, or 130% of local gdp) in various forms including bonds and opaque debts owed by local-government-financing vehicles (lgfvs).
  • Interest payments make up more than 8% of the province’s fiscal expenditure, compared with a national average of 6%.
  • The pressure on Guizhou’s officials is immense. The province will probably be the first to receive a central-government bail-out.
  • Cinda, one of China’s largest state-owned asset managers, said that it was sending a team of 50 experts to Guizhou to survey the situation.
China’s local-debt crisis is about to get nasty
Worries from a far-flung province | Finance & economics