Economics
China's $195 Billion Debt Splurge Has Less Bang Than You Might Think
- Local governments rushing to sell bonds are short of projects
- More than 40% of the debt doesn’t drive infrastructure growth
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China’s burst of local bond issuance is supposed to fund roads, affordable homes and other infrastructure developments that will help support its flagging economy. But there don’t seem to be enough projects around to spend the money on.
Provincial authorities had by the end of September already raised 92 percent of the 1.35 trillion yuan ($195 billion) worth of special infrastructure bonds that the central government has targeted for the entire year. The bonds, which are separate to provincial authorities’ budgets, are part of an attempt to counter the economic slowdown by financing projects from railwys to environmental facilities and affordable homes.