China: Government borrowing is likely to increase yet again – Rabobank
|Rabobank analysts note that China has announced that local government borrowing is likely to increase yet again from the already pre-announced CNY2.15 trillion (USD305bn) level of special bond issuance that has already been approved.
Key Quotes
“Let’s recall that officially local governments are not allowed to run deficits; have nonetheless run up vast debts; we were told they were deleveraging; they have already had one de facto PBOC bail out; and they are now essentially becoming a normal arm of fiscal policy…except that most won’t be able to raise the revenue to ever repay this new (or old) borrowing given their tax-raising ability is mainly via rising land prices. If anything happens to property prices, it’s game over – and yet prices are already so high they are causing social problems and distorting the rest of the economy.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.