“There was certainly development pressure in the past, but with the support of the central government and the coordination of the eastern and western regions, we have resolved it. [debt] It has become quite difficult,” Zhao Ziyi, a member of the National People’s Congress (NPC) from Guizhou province and dean of Guizhou University of Finance and Economics, said on the sidelines of the National Assembly’s annual meeting in Beijing this week.
Beyond China’s outrage, when even water is at risk, where does the investment go?
Beyond China’s outrage, when even water is at risk, where does the investment go?
Zhao said investment is still part of various measures to develop the local economy, but consumption is “gradually” becoming the driving force.
Meanwhile, Guizhou has made progress in its smart agriculture model and improved crop cultivation efficiency, state media reports said. Additionally, Guizhou’s service sector has undergone “significant” changes over the years, Zhao said. Transportation-related investments have encouraged more people to visit and live in the area, she said.
“The role of investment in the overall economy is gradually changing. [replaced] by others. We will work together to overcome this challenge,” she added.
The Guizhou provincial government announced on February 23 that it had allocated 319.74 billion yuan (US$44.5 billion) for infrastructure projects this year, a 60% decrease from 800.39 billion yuan in 2023. The average annual expenditure on large-scale projects was about 770 billion yuan. From his 2017 to his 2023 in Guizhou province, based on government data.
The disinvestment by the Guizhou government comes at a time when the Chinese government has increased oversight of local government financing vehicles (LGFVs), platforms used by local governments for off-budget borrowing to fund infrastructure projects. This comes amid calls for more efforts to resolve the issue.
Guizhou is the largest issuer of “special refinancing bonds,” low-interest bonds intended to replace high-yield LGFV bonds, GF Securities said, adding that the Chinese government approved the sale of such bonds in October. After that, Guizhou Province sold 258.8 billion yuan. The amount equivalent to the debt will be repaid by February 23rd.
Although fixed asset investment in Guizhou helped accelerate the region’s gross domestic product (GDP) growth rate from 2011 to 2020 to one of China’s top three levels, Guizhou is still struggling with new and profitable industries. could not be built. Traditional manufacturing is baijiuIt is a Chinese distilled alcoholic beverage that has supported increased tax revenue for local governments for many years.
Meanwhile, Guizhou’s debt pressure continues to increase, with GF Securities estimating that between 2018 and 2022 there will be more than 100 defaults in LGFV private transactions, affecting Guizhou’s ability to repay its borrowings. caused serious concern.
Chinese anti-corruption campaigner shames city officials for wasting $21 billion on pet projects
Chinese anti-corruption campaigner shames city officials for wasting $21 billion on pet projects
The cash-strapped state has also been embroiled in a number of controversies stemming from its fiscal problems, including the LGFV’s 20-year loan rollover in 2023, with the banking sector bearing the brunt of the local government debt crisis. In January, a former party official in Guiyang, the capital of Guizhou province, admitted in a state media documentary that he spent recklessly on large-scale tourism projects while in office and said he believed he would not be held accountable.
Xia Xiaoqing, a lawyer at Jiangxi Xunbo Law Office, said that although contracts with local governments often come with guarantees, there are always risks.
Will many of China’s distressed state-owned enterprises seek long-term debt restructuring?
Will many of China’s distressed state-owned enterprises seek long-term debt restructuring?
“However, government projects are managed by specific officials,” Xia said in a comment posted on the law firm’s social media account on WeChat on Tuesday. “Therefore, the risks in government projects are greater human risks. We also hope that government project management will become more standardized in terms of adhering to the rule of law.”
China’s Finance Minister Lan Feng promised on Wednesday to improve the management of local government debt and gradually resolve related risks through “high-quality development”.
Some analysts do not expect Guizhou’s debt pressure to ease anytime soon. In Guizhou Province, LGFV debt worth a total of 74.23 billion yuan, one-third of the outstanding LGFV debt, will mature this year, and according to GF Securities estimates, the ratio will further rise to 37.1% in 2025. He says he will.
“The debt created by Guizhou’s investment-driven development model over the past decade will take a considerable amount of time to resolve, and the impact of the pandemic on the tourism industry will also take time to repair.” GF Securities said in a memo dated February 29. .
