, Columnist
China’s Mystery 14,960 Municipal Debt Issuers
The true size of local government borrowings is unknown. Yet thanks to Beijing’s latest debt swap program, investors can’t get enough of it.
Money to build.
Photographer: Qilai Shen/BloombergThis article is for subscribers only.
Forget real estate developers. The gray rhino of China’s economy, and perhaps the most lucrative trade of the year, is hidden municipal debt.
By some estimates, borrowings from local government financing vehicles, or off-balance-sheet entities deployed to fund infrastructure and stimulate regional economies, reached 57 trillion yuan ($7.8 trillion) last year, or 48% of China’s gross domestic product. LGFV debt is almost as big as central and local government borrowings combined, according to the International Monetary Fund.