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China has estimated 40 trillion yuan of local government debt (no one knows exactly how much), since no one will ever be held accountable for it, cities are ess
by AFascistWorld 7y ago
China has estimated 40 trillion yuan of local government debt (no one knows exactly how much), since no one will ever be held accountable for it, cities are essentially borrowing nonstop like there's no tomorrow coz you know free money why not.
贺铿, member of the National People's Congress Financial and Economic Affairs Committee, claims not single one of the cities planned to ever repay. Some even struggle to pay interest.
- metalliqaz 7y agoMost of the cities are likely correct, thus they made the correct move. They will be bailed out just as happens everywhere else. Perhaps the central government even likes this arrangement, because it allows them to basically wipe out cities that don't fit into their plans for the future.
- simonh 7y agoYou can wipe out the city, but somebody still needs to pay the debts.
- zeusk 7y agoOR, you get a default on that debt (esp. considering the entity is insolvent).
- cc439 7y agoAs best as I can tell, the Chinese government's plan is to externalize the effects of all the debts that turn bad. At the end of the day, foreign investment in physical assets (factories, equipment, supply chains, etc) and infrastructure cannot simply be repossessed, especially under the auspices of a fiercely nationalistic and dictatorial Chinese government. If Chinese debt holders are no longer able to meet their obligations, the Chinese government will step in to secure the debts they hold and nationalize/seize whatever valuable assets are held by foreigners, effectively offloading all their financial problems on the rest of the world. What recourse will a company like Apple have against a sovereign nation no longer willing to play by WTO rules since they have grown strong enough to ignore all but the most sincere military threats?
- simonh 7y agoHi China, good luck buying oil without any Dollars.
- gscott 7y agoIran will take food and hard goods instead of dollars.
- cc439 7y agoChina's recent support for Maduro in Venezuela, condemnation of the US for ending their exemption from Iranian oil sanctions, and their many energy related treaties and contracts they've signed with Russia over the past decade point to their understanding of this weak point. The Chinese have been making all the right moves in positioning themselves as an alternative to American hegemony for these energy-rich countries that have become targets for the American destabilization machine. I doubt there will ever be such a thing as the PetroYuan but the era of the PetroDollar might rapidly come to a close should China goad the Maduro regime into putting their oil industry's infrastructure up as collateral in return for Chinese investment in sorely needed maintenance, upgrades, etc for that industry. China is the only nation with the financial means (even if it's all funny money as this article implies) to rebuild Venezuela's oil infrastructure that has been massively underfunded to the tune of tens of billions of USD a year for over a decade. The Maduro regime may be desperate enough to sign an agreement similar to the ones China has been offering African nations whereby a loan that will never be repaid is made with the knowledge that China will wind up owning the assets put up as collateral when the country in question eventually fails to meet their obligations.
- beambot 7y agoThis is why many companies, like Apple, are moving (factories, equipment, supply chains, etc) out of China. Then what?
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- salawat 7y agoMy God. He talks about wiping out cities, and he's worried about balance sheets. I understand the context around it, but damn. That's cold. Sometimes I am left in awe at the level of of mental overloading human beings are capable of that leads to statements like that.