4 ms·

Who lends money to a local government which has no revenue?

• seanmcdirmid 8y ago
  They make money by selling land, and they also get a smallish cut of the VAT (replacing business taxes they used to get). They also outsource their debt spending to locally controlled SOEs who theoretically should be able to make money by being an state-owned enterprise. Also, they make the state-owned banks lend to them regardless, at a low interest rate since there is an implicit garauntee they won’t default. It isn’t really sustainable. It is only a matter of time before China introduces a property tax to fund local governments.
  • paradite 8y ago
    According to Wikipedia local government collects taxes, including property tax: https://zh.m.wikipedia.org/wiki/地方税 https://zh.m.wikipedia.org/wiki/地方税
    • seanmcdirmid 8y ago
      ATM, property taxes only have limited rollout in Chongqing and Shanghai on second properties. See https://www.bloomberg.com/gadfly/articles/2018-03-08/don-t-bet-your-house-on-china-s-property-tax-just-yet https://www.bloomberg.com/gadfly/articles/2018-03-08/don-t-b....
• bduerst 8y ago
  No tax revenue != no revenue. They also have assets.