Local Government Debt Is China’s Subprime, Ex-Lawmaker Says
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Borrowing by thousands of companies set up by China’s local governments to fund construction is the nation’s equivalent of the U.S. subprime mortgage crisis, said Cheng Siwei, a former deputy head of the country’s top legislative body.
“Our version of the U.S. subprime crisis is the lending to local governments, which is causing defaults,” Cheng said at the World Economic Forum in the Chinese city of Dalian today. He served as vice chairman of the standing committee of the National People’s Congress from 1998 to 2003.