China is banking on a new wave of debt-fuelled infrastructure spending to arrest a deepening economic slowdown, but the surge in local government debt may complicate Beijing’s long-term efforts of reining in financial risks in its economy.
In an unusual move last week, China’s National People’s Congress Standing Committee authorised the central government to allocate the local government debt quota “ahead of schedule”, breaking what is only a ceremonial arrangement that Beijing has to include a nationwide debt quota in its budget report approved by the parliamentary gathering in March before it can allocate quotas to local authorities.
In an unusual move last week, China’s National People’s Congress Standing Committee authorised the central government to allocate the local government debt quota “ahead of schedule”, breaking what is only a ceremonial arrangement that Beijing has to include a nationwide debt quota in its budget report approved by the parliamentary gathering in March before it can allocate quotas to local authorities.
