Maybe Chanos' short call on China is right. It appears that municipal budgets in China are facing funding shortfalls.
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However, local governments are now under increasing funding pressure as debts come due and revenues fall. Over 17 per cent of the loans to local governments, roughly Rmb1.8tn, are due this year, according to the National Audit Administration in July 2011.
That is already throwing a big spanner in local government spending plans. Shenzhen, the city across the border from Hong Kong, will have to spend 13 per cent of its annual budget to repay debts this year, including local bonds issued in 2009 to boost the economy after financial crisis, said Southern Metropolis Daily, a local newspaper.
At the same time, many local governments reported the slowest growth of tax income since 2009. With growth slowing, Guangdong and Jiangsu, the two biggest provinces in China by GDP, experienced much slower revenue growth in the first half in 2012 from previous year, according to the two provincial governments at the end of last month.
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The rest of the article can be found here.
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However, local governments are now under increasing funding pressure as debts come due and revenues fall. Over 17 per cent of the loans to local governments, roughly Rmb1.8tn, are due this year, according to the National Audit Administration in July 2011.
That is already throwing a big spanner in local government spending plans. Shenzhen, the city across the border from Hong Kong, will have to spend 13 per cent of its annual budget to repay debts this year, including local bonds issued in 2009 to boost the economy after financial crisis, said Southern Metropolis Daily, a local newspaper.
At the same time, many local governments reported the slowest growth of tax income since 2009. With growth slowing, Guangdong and Jiangsu, the two biggest provinces in China by GDP, experienced much slower revenue growth in the first half in 2012 from previous year, according to the two provincial governments at the end of last month.
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The rest of the article can be found here.
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