Zero-Covid spending and lower taxes has led to £4.2tn in local government debt, posing a ‘big headache’ for the economy
In China’s Sichuan province, Leshan city has plans to sell the operating rights to the Big Buddha, a 71-metre tall Tang dynasty stone statue, in one of a series of creative methods cash-strapped local governments are using raise money.
Having spent more than £42bn last year on Covid-prevention measures, and hit by falling tax revenues, by December 2022 local governments had accumulated 35tn yuan (£4.2tn) in debt, up from 30.5tn yuan the previous year. That means that China’s provincial debt burden is roughly 20% bigger than Germany’s total GDP. In 2022 Hegang, a city in the northern province of Heilongjiang, became the first city in China to undergo a fiscal restructuring.
