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.

May 5, 2023 . 9:27 PM

1 min read

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.