China’s $6 Trillion Hidden Debt Gets Stress-Tested in Downturn
- Beijing shows determination to tackle off-balance sheet debt
- Property slump set to squeeze local governments’ finances
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China’s property market crunch is making it difficult for local governments to cut an estimated $6 trillion of hidden debt even as Beijing shows more determination in cracking down on the problem.
Beijing, Shanghai and Guangdong province are planning trials to eliminate the off-balance sheet borrowing that local authorities use to raise funds for spending. Although there were no details, it’s likely the pilot programs could eventually be rolled out to more of the 31 other regions in the country.