1/5
The deputy director of a Chinese research institute argues that in order to prevent provincial debt problems from getting worse, local governments must cut back on wasteful infrastructure spending.
caixinglobal.com/2021-12-24/opi…
The deputy director of a Chinese research institute argues that in order to prevent provincial debt problems from getting worse, local governments must cut back on wasteful infrastructure spending.
caixinglobal.com/2021-12-24/opi…
2/5
"Based on the structure of expenditure in these regions," he says, "the only way to alleviate debt risks is to reduce general expenditures by reducing unnecessary infrastructure expansion, and to improve the efficiency of investment in infrastructure and public transport."
"Based on the structure of expenditure in these regions," he says, "the only way to alleviate debt risks is to reduce general expenditures by reducing unnecessary infrastructure expansion, and to improve the efficiency of investment in infrastructure and public transport."
3/5
While there are still a few people who don't think wasted infrastructure spending is a major source of China's soaring debt burden, by now most economic policymakers and advisors seem to recognize how serious the problem has become.
While there are still a few people who don't think wasted infrastructure spending is a major source of China's soaring debt burden, by now most economic policymakers and advisors seem to recognize how serious the problem has become.
4/5
But this has been a problem for over a decade. The reason it hasn't been addressed until now isn't because no one understood the problem but rather because resolving this problem clashes with other important objectives.
But this has been a problem for over a decade. The reason it hasn't been addressed until now isn't because no one understood the problem but rather because resolving this problem clashes with other important objectives.
5/5
Specifically, the reason for much wasted infrastructure spending has been to boost economic activity. As long as GDP growth targets remain high, local officials have to choose either to meet the targets or to continue sending unnecessarily.
Specifically, the reason for much wasted infrastructure spending has been to boost economic activity. As long as GDP growth targets remain high, local officials have to choose either to meet the targets or to continue sending unnecessarily.
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