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A sports park on the site of a former shanty town in the Chinese coal town of Hegang.

A sports park on the site of a former shanty town in the Chinese coal town of Hegang.

 Photographer: Qilai Shen/Bloomberg

Politics
The Big Take

China’s $23 Trillion Local Debt Mess Is About to Get Worse

What happened in cash-strapped Hegang points to a long economic slog for the rest of the country. 

In 2021, a remote coal town in northeastern China was forced to undergo an unprecedented financial restructuring. Its struggles since are an ominous sign for President Xi Jinping as other heavily indebted municipalities look set to follow suit.

Hegang, a city with nearly a million people near the Russian border, had debt of more than double its fiscal income when it hit the headlines almost 18 months ago. It was the first time a city administration had taken official emergency steps since the State Council unveiled rules in 2016 on how local governments, from counties to provinces, should deal with debt risks.