7 August 2023
China faces a mounting municipal debt crisis, with local governments deep in debt following excessive infrastructure spending. Local government debt reached $12.8 trillion (76% of GDP) in 2022, up from 62.2% in 2019. To tackle the crisis, Beijing considers measures like bond issuance, loan rollovers, and possibly using central funds. But aiding local bodies might encourage more reckless investments. Comprehensive economic reforms are needed to address the core issue.