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interestrateripoff

China's Chief Auditor Warns Mounting Local Government Debt A Risk To Economy

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http://www.telegraph.co.uk/finance/china-business/7851504/Chinas-chief-auditor-warns-mounting-local-government-debt-a-risk-to-economy.html

China's chief auditor has warned that high levels of local government debt could derail the country's economy, with some observers suggesting that a number of Chinese provinces are even more fiscally-troubled than Greece.

Liu Jiayi, the head of China's National Audit Office said the financial crisis had left some Chinese provinces with serious debt problems.

"The scale is large, and the burden is quite heavy," he said, in an annual report to the Chinese government.

Chinese provinces are, in some cases, equivalent in size to major European countries and run with a degree of fiscal autonomy. The southern province of Guangdong, for example, has the same population size as Germany.

However, provincial budgets have been classified as state secrets until now and this is the first time that China has disclosed the level of local government debt.

Mr Liu said the ratio of debt to disposable revenues at some local governments was over 100pc and in the highest case it was 365pc.

He said the audited debts of 18 of China's 22 provinces, together with 16 cities and 36 counties amounted to 2.79 trillion yuan (£279bn) in 2009.

Several observers believe the situation is far worse. The China Daily newspaper, which is run by the government, suggested that the total sum could add up to between 6 trillion and 11 trillion yuan (£590bn-£1.08 trillion).

Victor Shih, a professor at Northwestern University in the United States, believes the sum in 2009 was 11.4 trillion yuan, equivalent to 71pc of China's nominal GDP.

Mr Shih has warned that local governments have also succeeded in rapidly funnelling large amounts of debt off their balance sheet and into public-private investment vehicles.

China's banking regulator said outstanding loans from banks to local government financing vehicles was 7.38 trillion yuan at the end of 2009, rising 70pc year-on-year.

Mr Shih, who researched more than 8,000 of these "local investment companies", said that orders to ramp up spending on infrastructure after the financial crisis could leave China with widespread debt problems.

"I collected data from thousands of sources, including regulatory filings, bond-rating reports and press releases of government-bank agreements," he said, although he admitted that comprehensive data was difficult to track down.

Next year, he is forecasting government debt to hit 96pc of gross domestic product as infrastructure projects continue to eat up cash and produce negligible returns.

"The worst case is a pretty large-scale financial crisis around 2012," he said. "The slowdown would last two years and maybe longer," he added.

The US debt-to-GDP ratio is close to 90pc while Greece's is 130pc.

China the great hope to secure global economic recovery because of it's trade surpluses.... Looks like the Chinese have been wasting money like everyone else and have even taken to Gordon Brown style accounting.

The communist party are corrupt and clearly many party officials are sticking their snout in the trough just like our politicians.

Malinvestments are happening globally and when the shtf all hell is going to break loose.

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[url="http://www.zerohedge.com/article/chinesrhaps we should send them to Gordon Brown.

I told you all on here the Chinese figures were not to be trusted. Too many escapes of info which suggest many problems brewing. Interesting that the Yuan has yet to appreciate against the USD when many (me included) thought it would. Perhaps the markets know more and are not impressed.

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I told you all on here the Chinese figures were not to be trusted. Too many escapes of info which suggest many problems brewing. Interesting that the Yuan has yet to appreciate against the USD when many (me included) thought it would. Perhaps the markets know more and are not impressed.

To be fair you can't trust anyone's figures.

It's the liar recovery.

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I told you all on here the Chinese figures were not to be trusted. Too many escapes of info which suggest many problems brewing. Interesting that the Yuan has yet to appreciate against the USD when many (me included) thought it would. Perhaps the markets know more and are not impressed.

My assumption is that China, unlike "everyone else" expects the Yuan to fall once the real state of affairs gets out - hence the floating.

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Next year, he is forecasting government debt to hit 96pc of gross domestic product as infrastructure projects continue to eat up cash

I'm really confused now

I thought China had a budget surplus, which is why thy can fund the debts of USA etc.

But if their national debt is 96% of GDP, who are they borrowing from?

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I'm really confused now

I thought China had a budget surplus, which is why thy can fund the debts of USA etc.

But if their national debt is 96% of GDP, who are they borrowing from?

Serpiente_alquimica.jpg

It would appear that the Chinese have been keeping what their local govts have been doing a secret for a reason, they just as screwed as the rest of us.

The Chinese are clearly moving now so they don't have to revalue their currency.

Something is going to give.

Edited by interestrateripoff

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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