China’s LGFV Insiders Say $9 Trillion Debt Problem Is Worsening
- Local government financing vehicles cutting back on investment
- Making LGFVs self-sufficient isn’t working in some places
China is attempting to defuse risks from its $9 trillion pile of off balance-sheet local government debt, without resorting to major bailouts.
That path forward is a treacherous one for President Xi Jinping’s government. To thread the needle, the provinces and cities whose borrowing drove the world’s largest infrastructure boom will need to roll back their spending and restructure debt — all without drastically dragging down economic growth. If they fail, it could thrust the world’s second-biggest economy into a prolonged malaise.