China Needs $3 Trillion Local Debt Solution, Top Economist Says
- Policy adviser says debt relief measures to date aren’t enough
- Local governments’ actions dragging on economy, Li Daokui says
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China needs to vastly step up its efforts to cleanse the balance sheets of the nation’s local governments, giving them the space needed to support consumer spending and strengthen the economy, one of the nation’s most prominent economists said.
The central government should take on at least 20 trillion yuan ($2.8 trillion) worth of local sovereign debt, David Li Daokui, an economics professor at Tsinghua University and a regular adviser on policy to Beijing, said in an interview. The debt relief measures policymakers rolled out late last year aren’t strong enough, he said.