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China’s local government debt has continued to rise in Q1 2023. At the end of April, the debt level is closer to the ceiling set by the central government for 2023 than in the previous two years. Local governments are likely faced with a tightening budget and limited fiscal flexibility created by debt burden and debt ceiling restrictions.
By Experts Table.Briefings
The European Commission is tightening the reins again on EU member states' budget policies. The escape clause for debt rules is to expire at the end of the year. This means that member states will once again be threatened with deficit procedures if they incur excessive new debt.
By Max Mustermann
Living like God in France. This view of Germany's neighbor probably has something to do with the country's very generous pension system. This is the second time President Macron dared to reform the pension system – and despite protests, he could go through with it this time.
By Table.Briefings
In December 2022, China’s newly added “Total Social Financing” (TSF) declined significantly compared to the same period in 2021. Although China lifted its strict three-year-long zero-Covid policy in early December, the momentum for China's economic growth remained relatively weak so far, signified by the slow credit growth.
By Experts Table.Briefings
The head of the UN Development Programme Achim Steiner warns that the dramatic debt levels of poor countries threaten progress on climate protection. Without restructuring the financial system, he says, the Paris Agreement will remain out of reach.
By Bernhard Pötter
China already has the longest high-speed train network in the world. By 2035, it is set to almost double. At the same time, the debts of the state railroad company are already reaching staggering heights.
By Redaktion Table
China's national debt, the Evergrande crisis, and China’s global debt diplomacy: Read all the important and latest news from China.Table editorial team.
China's national debt is estimated to rise to 14 trillion US Dollars in 2022. This number approximately amounts to 78 percent of China’s gross domestic product (GDP). Large parts of China’s national debt can be attributed to supporting non-profitable state-owned enterprises.
Furthermore, in 2020, following the coronavirus pandemic, China’s debt-to-GDP ratio rose to 270%. However, in 2021, the trend was reversed due to higher consumption and exports. Nevertheless, there is a lot of speculation on the sustainability of China’s model and whether or when the bubble would burst. A collapse could lead to a global financial crisis.
China's economic growth is built upon debt. Local governments are piling up deficits to boost the economic development of provinces. However, China’s central government announced in its 14th Five-Year Plan that it would stabilize financial markets and prevent further accumulation of deficit.
China’s Evergrande debt crisis starting in 2020 demonstrates the issues concerning China’s strategy. After new regulations on limits for Evergrande and other companies in China’s property sector were put into effect, Evergrande started facing immense difficulties. The real estate market is regarded as a core problem of the Chinese economy.
Yet, despite China’s high national debt, experts believe that the Chinese government has sufficient instruments at its disposal to cushion a collapse of its economy resulting from a possible financial crisis. Climate change, on the other hand, is seen as a far greater threat to China's prosperity.
Recently, accusations against China’s foreign debt diplomacy in African and Asian countries have arisen. China is the most important lender to many African countries. Countries use the money for infrastructure development. However, China uses this diplomacy to promote its values and narratives. Economic aid is often followed by political and economic dependencies. China’s debt diplomacy has risen the question as to whether it should be considered a trap for countries relying on China’s lending.
Read all the latest news on China’s policies and foreign debt diplomacy, delivered to you by China.Table.