Connect with us

Hi, what are you looking for?


Shanghai Starts Trial to Clear Hidden Debt as China Cuts Risks

Forex1 hour ago (Oct 26, 2021 11:27PM ET)

(C) Bloomberg. A man stretches on the Bund as skyscrapers of the Pudong Lujiazui Financial District stand across the Huangpu River during sunrise in Shanghai, China, on Friday, March 20, 2020. Most of China is now considered low risk and should return to normal work and life, Premier Li Keqiang said at a government meeting on the coronavirus, which is spreading rapidly in Europe, the U.S. and elsewhere. Photographer: Qilai Shen/Bloomberg

(Bloomberg) — The city of Shanghai launched a trial to eliminate all so-called hidden government debt, becoming the second Chinese region to start a program to clean up off-balance sheet risk.

The trial was in response to the central government’s strategy to prevent and resolve financial risks related to local government hidden debt, the Shanghai city government said in a statement on its website Tuesday. It didn’t provide further details on the trial.

The announcement came two weeks after Guangdong province, the manufacturing powerhouse in southern China, announced a similar trial, suggesting local governments are getting more serious about tackling off-balance sheet debt.

A major source of hidden debt is local government financing vehicles, or LGFVs, which are used to raise funds for infrastructure and other expenditure and carry an implicit guarantee of repayment. Goldman Sachs Group Inc (NYSE:GS). estimated that LGFV debt surged to 53 trillion yuan ($8.3 trillion) at the end of last year from 16 trillion yuan in 2013. That’s equal to about 52% of China’s gross domestic product and is larger than the amount of official outstanding government debt.

Beijing has tried to tackle hidden debt for several years already but gave it more importance this year after calling it a national security risk. It’s ordered officials to deal with it by paying down debt or bringing it onto the balance sheets of local authorities.

Cities and provinces may have started to use some of the proceeds from the sale of refinancing bonds to repay hidden debt this year, an analysis by Bloomberg found.

(C)2021 Bloomberg L.P.

Shanghai Starts Trial to Clear Hidden Debt as China Cuts Risks

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

World News

Insomnia is the most common sleep disorder in the global population. Therefore, it is a problem that many people suffer or have suffered...

World News

George Soros and Bill Gates are part of a consortium acquiring a British developer of rapid-testing technology, including for Covid-19 and tropical diseases,...


If you parked your car in one of the thousands of parking spots across Calgary, there’s a good chance you paid the Calgary Parking...


ForexMay 27, 2021 02:04AM ET (C) Reuters. By Peter Nurse — The dollar edged higher in early European trade Thursday, finding support from...

Disclaimer: it's managers and its employees (collectively "The Company") do not make any guarantee or warranty about what is advertised or above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. Copyright © 2021 Your Morning Voice. All Rights Reserved