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2 Sep 2015
Moody’s raises concerns over mounting China’s regional debt
FXStreet (Mumbai) - China's regional and local government (RLG) debt pile is just growing and growing, heading toward potentially unsustainable dimensions, especially when revenues fall, Moody's Investors Service warned on Wednesday.
It cited official data according to which the country's RLG debt grew by more than one third between June 2013 and end-2014 to 24 trillion yuan ($3.7 trillion). That's about 38% of China's gross domestic product (GDP) in 2014.
Moody's warning added to the recent pile of growing concerns surrounding the Chinese economy, including slowing factory activity, worrying signals from the real-estate sector and a plunging equity market.
Key findings from the report:
"Rising debt levels weaken the RLGs' credit profiles, leaving them exposed to the effects of China's slowing economy and the related weakening in revenues, against the backdrop of falling land sales."
"Seven provinces experienced falling revenues, 18 saw single-digit revenue growth, while only six achieved double-digit revenue growth."
It cited official data according to which the country's RLG debt grew by more than one third between June 2013 and end-2014 to 24 trillion yuan ($3.7 trillion). That's about 38% of China's gross domestic product (GDP) in 2014.
Moody's warning added to the recent pile of growing concerns surrounding the Chinese economy, including slowing factory activity, worrying signals from the real-estate sector and a plunging equity market.
Key findings from the report:
"Rising debt levels weaken the RLGs' credit profiles, leaving them exposed to the effects of China's slowing economy and the related weakening in revenues, against the backdrop of falling land sales."
"Seven provinces experienced falling revenues, 18 saw single-digit revenue growth, while only six achieved double-digit revenue growth."