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CCP Local Government Debts Reach Highest Level in Recent Data Release

The Ministry of Finance of the Chinese Communist Party (CCP) released the latest data on local government bonds on Jan. 30, revealing that China’s outstanding local government debts had reached a record high of 40.74 trillion yuan ($5.71 trillion) by the end of 2023.

The data showed that local governments nationwide issued 9.34 trillion yuan ($1.31 trillion) worth of new bonds in 2023, a 27 percent increase from the previous year. Local borrowing hit a record high, exceeding 2022 borrowing by nearly 2 trillion yuan ($280.8 billion).

In December 2023 alone, local government bond issuance reached 195.6 billion yuan ($27.5 billion).

Due to the rapid increase of local government debts, bond interest payments have been rising annually. The Ministry of Finance’s data indicated that interest payments on local government bonds in 2023 amounted to 1,228.8 billion yuan ($172.5 billion). This represents a 9.6 percent increase from 2022, according to

Local government bonds are categorized into new bonds and refinancing bonds based on their use. New bond funds are primarily used for major project construction, while refinancing bond funds are used to repay maturing local government bonds or existing debts, effectively borrowing new debts to pay off old ones.

Since the implementation of the CCP’s new “Budget Law” in 2015, the issuance of local government bonds has become the only legal way for local governments to borrow. As a result, the scale of local debts has expanded rapidly in recent years, with a significant increase in local borrowing last year.

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According to the latest data, Guangdong, China’s richest province, continues to lead in bond issuance in 2023, with 687.1 billion yuan ($94.5 billion), followed by Shandong Province with 631.1 billion yuan ($88.6 billion). Hunan Province ranked third with 468 billion yuan ($65.7 billion), while Jiangsu and Zhejiang each reached 458 billion yuan ($64.3 billion) and 454.8 billion yuan ($64.4 billion), ranking fourth and fifth. Anhui surged to sixth place with 448.3 billion yuan ($62.9 billion), and Sichuan, Hebei, Guizhou, and Henan also issued bonds exceeding 400 billion yuan ($56.2 billion).

Henry Wu, a macroeconomist in Taiwan, commented to The Epoch Times that China’s economic issues are rooted in a debt crisis, where its economic model built on debt is unsustainable. He stated, “An important feature of China’s economy is that its development is based on debts, borrowing money to carry out development.”

He added, “Now, China’s economy has fallen into the trap of a debt economy, which has led to financial crisis, fiscal crisis, employment crisis, etc.”

The figures released represent only the explicit debts of China’s officially recognized local governments. However, experts point to the larger issue of local governments’ implicit debts. Currently, China’s local implicit debts are primarily concentrated in local government investment and financing platform companies, as reported by Chinese finance media Yicai.

Wang He, an expert on China affairs and columnist for The Epoch Times, highlighted that the main problem with local implicit debts is that the base numbers are unclear. “Governments at all levels of the CCP are deceiving each other, and no one can know the real numbers,” he noted.

Fang Xiao, Cheng Jing, and Yi Ru contributed to this report.

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