By any account, $1 trillion seems huge. That's the scale of budget shortfalls facing Chinese provinces, reducing their fiscal firepower to fund infrastructure spending and tax cuts, and raising risks for the world's second-biggest economy in 2023.
Local governments must also make debt payments in coming months, portending more financial pain and limiting their ability to meet Beijing's requests to boost spending. Already, many of them have resorted to cutting salaries, reducing headcounts, lowering subsidies and even imposing disproportionately hefty fines to meet budget shortfalls.
"With the slower growth this year, we expect fiscal deficits for regional and local governments will remain substantial, reflecting the property slowdown and lingering effects of the coronavirus shock," said Jennifer A. Wong, analyst at Moody's, which expects 2022 economic growth to slow to 3.5% from 8.1% in 2021.
However, they face a squeeze on their already tight cash-flows as maturing local government debts peak in 2023 for the 2021-2025 period, Luo warned. Nie is forecasting GDP growth of 5.5% next year, assuming few or no COVID-19 disruptions, better than theHighlighting the pressure on finances, the provinces of Shandong, Shanxi, Henan, Zhejiang as well as the municipality of Tianjin said they had all shed budgeted headcounts at government agencies in recent months.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
VW investing $2.3 billion in Chinese autonomous driving venture - AutoblogVW is partnering with a local autonomous vehicle firm to develop self-driving tech for China.
Read more »
Netflix Kicks Off Media’s Q3 Earnings Season Under an Economic CloudNew VIP+ Analysis: Media earnings are in focus as low expectations for the industry and a weakened economy threaten to stifle future growth.
Read more »
Chainlink Down by 5% as Altcoins Collectively See Massive Decline$Link bulls lost momentum, allowing for bears to push prices down 5% per coinmarketcap data
Read more »
China's Xi calls for military growth as party congress opensBEIJING — Chinese leader Xi Jinping on Sunday called for faster military development and announced no change in policies that have strained relations with Washington and tightened the ruling Communist Party's control over society and the economy.
Read more »