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

CNBC
Summary
Nutrition label

88% Informative

Analysts are looking at connection between China 's real estate slump and local governments' financing.

"Macroeconomic headwinds continue to hinder the revenue-generating power of China 's local governments," says S&P Global Ratings .

The bulk of Chinese household wealth went into real estate in the last two decades .

Beijing began cracking down on developers' high reliance on debt in 2020 .

China 's debt-to-GDP has climbed by almost 30 percentage points to 310% of GDP in the second quarter of 2024 .

Local government-affiliated business entities have taken on significant levels of debt to fund public infrastructure projects.

The LGFV sector is a "bigger grey rhino than real estate," Natixis' Alicia Garcia-Herrero said.

VR Score

93

Informative language

95

Neutral language

53

Article tone

formal

Language

English

Language complexity

62

Offensive language

not offensive

Hate speech

not hateful

Attention-grabbing headline

not detected

Known propaganda techniques

not detected

Time-value

short-lived

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