1/5
Caixin says that regulators may soon forbid Chinese provinces with excessive amounts of hidden LGFV debt from borrowing for any other reason than to service existing debt (although much of their borrowing is done for precisely that reason).
caixinglobal.com/2021-01-27/chi…
Caixin says that regulators may soon forbid Chinese provinces with excessive amounts of hidden LGFV debt from borrowing for any other reason than to service existing debt (although much of their borrowing is done for precisely that reason).
caixinglobal.com/2021-01-27/chi…
2/5
While this will probably be manageable in 2021, once we get through the initial economic surge driven by the partial reversal of last year's collapse in consumption, a constraint on the ability of provinces to leverage up will run up against any possibility of the...
While this will probably be manageable in 2021, once we get through the initial economic surge driven by the partial reversal of last year's collapse in consumption, a constraint on the ability of provinces to leverage up will run up against any possibility of the...
3/5
country's annual GDP growth rate exceeding 2-3%. Provinces can only generate much higher growth rates by borrowing huge amounts and aggressively funding investment projects, most of which do not generate enough productive capacity to service the debt.
country's annual GDP growth rate exceeding 2-3%. Provinces can only generate much higher growth rates by borrowing huge amounts and aggressively funding investment projects, most of which do not generate enough productive capacity to service the debt.
4/5
In that case either Beijing must accept much lower growth rates or local governments are going to have to learn new borrowing tricks that allow them to continue expanding leverage without violating the new borrowing limits. One way, for example, might be to transfer...
In that case either Beijing must accept much lower growth rates or local governments are going to have to learn new borrowing tricks that allow them to continue expanding leverage without violating the new borrowing limits. One way, for example, might be to transfer...
5/5
land to real estate developers which they can then use to leverage up and fund new real estate development without violating their own "three red lines".
land to real estate developers which they can then use to leverage up and fund new real estate development without violating their own "three red lines".
• • •
Missing some Tweet in this thread? You can try to
force a refresh
