KeithGram: Big Debt in Little China

There is an article in the Financial Times (…) about debt problems in China.

I have taken the liberty of summarizing the key points:

 – Local governments borrowed to buy unneeded “infrastructure”
 – They acted under orders from Beijing
 – Unable to pay, they “rolled the debt over”
 – Li says it’s OK, it takes time to amortize
 – Yiping says it’s fine when duration is mismatched
 – Peng says everyone does it
 – Most banks refuse to lend any more
 – Premiere Wen says “everything is under control”
 – He adds “most debt is backed by good assets and cash flows”
 – Officially, there is little debt

 – Unofficially, there is little transparency or accountability
 – Ultimately, the debt problem falls onto the central government  


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