Warning signs of hidden debts of Chinese local government
ANBOUND
Since Moody's has downgraded China's sovereign rating on May 24, China's Ministry of Finance took the lead to express their views from the legal perspective. Anbound research team said that the Ministry of Finance only considers from the legal level, yet in reality it is difficult for the government to cut off the financing platform debt of the local government and the state-owned enterprises. Local governmental purchase services, PPP, industrial investment funds and other recessive debt phenomenon have become increasingly prominent. The structural problems of China's excess savings and the pressure of steady growth have led to the existence of objective necessity of hidden liabilities in local governments. In the future, China must guard against the hidden debt of local governments and the double expansion of bank financial management.