Latest Data Show CCP Local Government Debts Reach Record High

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

The data show that nationwide local government issued 9.34 trillion yuan ($1.31 trillion) worth of new bonds in 2023, a year-on-year increase of 27 percent. Last year, the scale of local borrowing hit a record high, nearly 2 trillion yuan ($280.8 billion) more than in 2022.

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

With the rapid increase of local government debts, bond interest payments are rising year by year. The data from the Ministry of Finance shows that interest payments on local government bonds in 2023 were 1,228.8 billion yuan ($172.5 billion). According to statistics from, a major Chinese finance media, this interest payment scale has reached the highest level since 2015, an increase of 9.6 percent compared with 2022.

Local government bonds are divided into new bonds and refinancing bonds according to their uses. The former funds are mainly used for the construction of major projects such as infrastructure, while the latter funds are used to repay the principal of maturing local government bonds or existing debts, which means borrowing new debts to pay back old debts.

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. The scale of local debts has expanded rapidly in recent years, and the local borrowing increased significantly last year.

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

Henry Wu, a macroeconomist in Taiwan, told the Chinese edition of The Epoch Times that the core of China’s economic problems is a debt crisis, that is, its debt economic model cannot continue. “An important feature of China’s economy is that its development is based on debts, borrowing money to carry out development.”

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

The released numbers are only the explicit debts of China’s local governments that are officially recognized. However, the bigger problem is local governments’ implicit debts, as pointed out by experts. At present, China’s local implicit debts are mainly concentrated in local government investment and financing platform companies, according to Chinese finance media Yicai.

Wang He, an expert on China affairs and Epoch Times columnist, wrote that the most prominent problem with local implicit debts is that the base number is unclear. Governments at all levels of the CCP are deceiving each other, and no one can know the real numbers.

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

From The Epoch Times

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