By Xander Snyder
The implications of China’s debt burden appear increasingly grim. We have previously discussed the relationship between the real estate market, China’s debt and retail investors who invest in securities of this debt, but local governments are also susceptible to the growing rot in the Chinese financial system. Stuck between a rock and a hard place as one of their primary sources of revenue has been cut back in recent years, local governments have taken on more debt to finance their expenditures. And their financial position appears to be deteriorating as well: On March 14, a Chinese official publicly warned that local governments are at growing risk of default.
Yin Zhongqing, deputy director of the National People’s Congress Financial and Economic Affairs Committee, warned that Beijing’s official figure for local government debt, $2.6 trillion, may be excluding more than $3 trillion of additional debt that is being hidden through a series of complic