Chinese Regions with High Debt Risk About to Resolve Woes But at Expense of Economic Growth, S&P Says

MT Newswires Live
Sep 08

China's local government financing vehicles with high debt risk are inching toward resolution through the country's fiscal reform measures, according to a note by S&P Global Ratings released Monday.

However, while the reforms are restrictive for capital and could interfere with local governments' ability to boost their industrial bases, they could "turn out to be credit positive and economically negative for certain regions," the rating agency quoted credit analyst Yunbang Xu.

Local governments will be able to help solve hidden debt by reducing the use of debt-funded investments through local government-backed entities, credit analyst Christopher Yip added.

"We view industrial investment as key to meaningfully expand a local government's tax base and fiscal capacity," according to a note by S&P Global Ratings.

Chinese provinces will see divergent investment growth due to uneven potential and emphasis on industrial upgrades, Xu said.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Most Discussed

  1. 1
     
     
     
     
  2. 2
     
     
     
     
  3. 3
     
     
     
     
  4. 4
     
     
     
     
  5. 5
     
     
     
     
  6. 6
     
     
     
     
  7. 7
     
     
     
     
  8. 8
     
     
     
     
  9. 9
     
     
     
     
  10. 10