{"id":122261,"date":"2011-07-07T07:03:00","date_gmt":"2011-07-07T14:03:00","guid":{"rendered":"http:\/\/chinadigitaltimes.net\/?p=122261"},"modified":"2011-07-07T07:03:00","modified_gmt":"2011-07-07T14:03:00","slug":"building-boom-in-china-stirs-fears-of-debt-overload","status":"publish","type":"post","link":"https:\/\/chinadigitaltimes.net\/2011\/07\/building-boom-in-china-stirs-fears-of-debt-overload\/","title":{"rendered":"Building Boom in China Stirs Fears of Debt Overload"},"content":{"rendered":"

The New York Times reports from Wuhan on the extensive redevelopment plans for the city and the problem of local debt incurred by Chinese cities’ ambitious building projects<\/strong><\/a>:<\/p>\n

\nThe plans for Wuhan, a provincial capital about 425 miles west of Shanghai, might seem extravagant. But they are not unusual. Dozens of other Chinese cities are racing to complete infrastructure projects just as expensive and ambitious, or more so, as they play their roles in this nation\u2019s celebrated economic miracle.<\/p>\n

In the last few years, cities\u2019 efforts have helped government infrastructure and real estate spending surpass foreign trade as the biggest contributor to China\u2019s growth. Subways and skyscrapers, in other words, are replacing exports of furniture and iPhones as the symbols of this nation\u2019s prowess.<\/p>\n

But there are growing signs that China\u2019s long-running economic boom could be undermined by these building binges, which are financed through heavy borrowing by local governments and clever accounting that masks the true size of the debt.<\/p>\n

The danger, experts say, is that China\u2019s municipal governments could already be sitting on huge mountains of hidden debt \u2014 a lurking liability that threatens to stunt the nation\u2019s economic growth for years or even decades to come. Just last week China\u2019s national auditor, who reports to the cabinet, warned of the perils of local government borrowing. And on Tuesday the Beijing office of Moody\u2019s Investors Service issued a report saying the national auditor might have understated Chinese banks\u2019 actual risks from loans to local governments. <\/p><\/blockquote>\n

The Washington Post interviews Satyajit Das, a derivatives consultant and author of “Traders, Guns & Money,” about local government debt in China:
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