‘One leak and we’ll all drown’: top Chinese lawmaker raises alarm over river of local government debt
NPC Standing Committee member says liabilities have been hidden and vastly underestimated
China’s debt mountain remains an ominous threat to the world’s second-biggest economy, and will take years to remedy, according to a prominent Chinese lawmaker.
Yin Zhongqing, who was re-elected on Tuesday as a deputy director of the National People’s Congress’s financial and economic affairs committee, said Beijing’s official figures for local government debt – 16.5 trillion yuan (US$2.6 trillion) overall as of the end of last year – could be underestimates, with many government liabilities disguised as corporate debt.
Yin said internal government assessments put the size of “hidden and disguised” local government debt at “at least 20 trillion”, making China’s official figure less than half of the real total.
Yin also said the percentage of non-performing loans in China’s banking system at the end of last year was much higher than the official 1.74 per cent because banks often rolled over problematic loans or hid risky debts.
Yin said the cause of the country’s debt problem was excessive printing of money in the past decade, with the amount in circulation quadrupling between 2007 to 2017 to 168 trillion yuan, or over 200 per cent of China’s nominal GDP.
