Domestic Local Debt Has Been Exposed To Over 21 Trillion Million Legal Entities To Pay Debts.

< p > government debt refers to the debts of local governments, liabilities for which they are liable to be repaid, liabilities for security obligations, and other related debts, especially the debts of some local financing platform companies.

Wang Zhihao, director of Greater China research at Standard Chartered Bank, said that at least 1 independent legal entities are expected to bear these debts.

As some of them try to cover up liabilities and part of inter enterprise loans and "ious" debts, the audit department's task is extremely arduous.

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< p > for the results, although the industry is expected to differ, but higher than the 10 trillion and 700 billion yuan in 2010 has become a consensus.

Yan Yan, vice president of China integrity international, said the debt is expected to be about 16 trillion yuan.

Some foreign banks have a higher forecast.

Standard Chartered Bank reported that the scale of local government debt could reach 21.9 to 24 trillion and 400 billion yuan, or 38% to 42% of GDP, nearly two times the current official estimate.

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< p > it is noteworthy that in the third quarter monetary policy implementation report issued by the central bank recently, the central bank also pointed out the problem of real estate and local government debt when analyzing the current economic situation in China, and considered that the two areas are "more prominent".

Local debt risk is regarded as one of the biggest challenges facing China's future development.

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< p > people even worry that some local governments may cause bankruptcy crisis because of excessive borrowing.

Zhang Ke, vice chairman of the China Association of Certified Public Accountants (CPA), who has previously worked with local debt auditors, said that most local governments did not have strong ability to repay their debts, and that the situation was out of control. However, since these debts were extended, they became a long-term debt, so the timing of the crisis was uncertain.

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< p > "how big is the scale of the local government debt? Who is spending money? How much is it? What is the flower? What is not to be spent? These problems are not compatible with the past, we must make clear, otherwise China's economy will not be able to take the next step."

Xie Guozhong, an independent economist, said.

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At present, local governments have been allowed to borrow new loans through short-term borrowing, which is very risky from a market perspective. P

Li Xunlei, chief economist of Haitong Securities (600837, stock bar), said: "after entering the audit, we are more serious about the source of funds, and it is not so easy to raise the new debt.

If the new debt is not allowed, the repayment pressure of the old debt will be greater.

This risk is universal. "

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What is more worrying about P is that the local government debt is far more than the data people have seen.

Economic observers believe that for a long time, the size and version of local government debt, excessive debt and low pparency of the debt make it difficult for the central government level to have an accurate grasp and correct risk assessment. This information asymmetry "buried mines" is the source of risk.

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< p > local state-owned enterprise debt is the most difficult part to clarify.

Xie Guozhong pointed out that the definition of local government debt does not depend on who borrows it, but depends on who is ultimately responsible for the repayment.

"From 2008 to 2012, the scale of credit of China's financial institutions has doubled. In recent years, due to poor corporate performance, the proportion of loans formed by enterprises is very large, most of which are related to local governments."

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< p > people worry more about the a href= "//www.sjfzxm.com/" and the debts of state-owned enterprises than /a.

State owned enterprises and investment companies held by local governments can get financial support more easily through bank loans, trust schemes, fund subsidiary asset management plans, financing leases and BT projects.

Chen Li, a strategist at UBS Securities, commented: "it is precisely because of this implicit government credit that the debt level of the company may exceed the acceptable scope of the normal market, and may eventually shift the risk to the local government."

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< p > the fact is that a sampling survey conducted by the Audit Commission in 2012 showed that 9 local government debt rates of 36 local governments had exceeded 100%, with a maximum of 188.95%.

Some people estimate that the proportion of local government debt to GDP is close to 60% of the international warning line.

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< p > "measuring debt risk is a very complicated matter. No single standard is very effective. At present, the internationally recognized line is the warning line drawn from the European Union's signing of the European Union Treaty, that is, the debt scale does not exceed 60% of GDP."

Jia Kang, director of the Fiscal Science Research Institute of the Ministry of finance, said that after the outbreak of the international financial crisis, the European Union's warning line has been lost. Neither France nor Germany has been able to hold on to 60%. The debt rate of Italy has been around 100% for many years, and Greece has more than 125% of the problem.

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< p > > a href= "//www.sjfzxm.com/" > Bank < /a > has already written off these bad debts on a large scale. In order to make up for the losses of the banking industry, the write off scale of bad debts of some Chinese banks has increased by two times.

Bloomberg News reported earlier that China's largest banks had written off 22 billion 100 million yuan (or 3 billion 600 million dollars) of bad loans in the first 6 months of this year, three times the same period in 2012.

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< p > Li Xunlei believes that from the perspective of the impact of real estate on local finance, the occurrence time of financial risk may not depend on the size of the debt, but rather on the time when the inflection point of the asset price corresponding to the asset will occur. The depth and breadth of the financial crisis will depend on the magnitude of the asset price fluctuation and the level of leverage corresponding to the asset price.

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Under the pressure of political achievements, some local governments achieve the goal of growth. The plan is simple: first, land acquisition and demolition, and then borrowing for real estate development. In many cases, the demand for new residential and office buildings will not be considered in the future. "P >

"The growth rate of local debt scale is more than 10% every year, and the bubble expansion speed of corresponding assets should exceed two digits."

Li Xunlei said.

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< p > from a macro level, local a href= "//www.sjfzxm.com/" > government debt < /a > has become a major problem encountered by the central government in implementing economic policies.

Analysts believe that the government hopes that the Chinese economy will get rid of the potential investment driven growth mode, which is to a certain extent in order to resolve the dangerous real estate speculative bubble. However, the rapid expansion of the scale of the local government debt that lacks regulation will hinder the smooth pformation of China's more stable and consumption led economic growth mode.

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The idea that P is comforting is that the central government still has room for maneuver.

"Considering that China is a centralized government, the central government has unlimited responsibilities for local governments, so the issue of liquidation is not a problem."

Gao Shanwen, chief economist of Anxin securities, believes that the essence of the local debt problem can be felt from the perspective of how to balance the relationship between the central government and local governments.

"The core of this problem is technically to properly handle the unification of financial and administrative power of local governments."

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