China’s Local Government Debt: Fallout from a Perfect Storm

Photographed by John Roberts (Source: Flickr)

The hidden debt of China’s local governments, which is held by entities called Local Government Financing Vehicles (LGFVs), has rattled financial markets. Now some worry that it could threaten the entire economy. While there is no official data, one estimate of LGFVs debt puts it at 59 trillion yuan (US$8.25 trillion) at the end of 2022. The International Monetary Fund estimates that the total might be even higher, more than 70 trillion yuan (US$9.79 trillion). To put these numbers in perspect...

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