1/4
"Li Keqiang urged local governments to take more action to support small businesses and called for more transfer payments at the grass roots level and for stronger financial support below the county level of government."
scmp.com/economy/china-… via @scmpnews
"Li Keqiang urged local governments to take more action to support small businesses and called for more transfer payments at the grass roots level and for stronger financial support below the county level of government."
scmp.com/economy/china-… via @scmpnews
2/4
Li has been calling for similar measures for a while, and I hope this time he is taken more seriously, but for me just as important as these transfers is the way in which they are funded, especially as local government revenues from the property sector are likely to decline.
Li has been calling for similar measures for a while, and I hope this time he is taken more seriously, but for me just as important as these transfers is the way in which they are funded, especially as local government revenues from the property sector are likely to decline.
3/4
If these transfers are funded by local governments liquidating land and other assets — something likely to generate strong political opposition — they will be sustainable and will represent the kind of wealth transfers that China needs and that would most benefit rebalancing.
If these transfers are funded by local governments liquidating land and other assets — something likely to generate strong political opposition — they will be sustainable and will represent the kind of wealth transfers that China needs and that would most benefit rebalancing.
4/4
If instead the transfers are funded by local-government borrowing, as they have been in the past, they will just postpone the costs of adjustment by capitalizing them in the form of higher debt burdens.
If instead the transfers are funded by local-government borrowing, as they have been in the past, they will just postpone the costs of adjustment by capitalizing them in the form of higher debt burdens.
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