China's local government debt problems are a hidden drag on economic growth

Published On Sep 15, 2024, 10:45 PM

China's local government debt is increasingly becoming a barrier to economic growth, significantly impacted by a persistent slump in the real estate sector. With falling property values and a decline in land purchases, local governments are experiencing a sharp decrease in revenue. This situation is exacerbated by difficulties in generating income through taxes and the need to recover unpaid historical taxes from businesses, which has damaged business confidence. Analysts assert that without a rebound in property prices and effective revenue generation, local governments will struggle to stabilize their escalating debts, leading to prolonged economic challenges.