Big Debt in Little China

– Local governments to borrow for unneeded “infrastructure”
– They acted under orders from Beijing
– Unable to pay, they “rolled the debt over”
– Li says it’s OK, it takes time to amortize(!)
– Yiping says it’s fine when duration is mismatched
– Peng says everyone does it
– Most banks refuse to lend any more
– Premiere Wen says “everything is under control”
– Wen adds “most debt is backed by good assets and cash flows”
– Officially, there is little debt
– Unofficially, there is little transparency or accountability
– Ultimately, the debt problem falls onto the central government