中國2.3萬億美元的隱性債務可能進一步攀升

Recently Yahoo News on-line reported the following:

China’s $2.3 Trillion Hidden Debt Could Climb Even Further

Bloomberg News

Bloomberg Wed., March 24, 2021, 2:09 a.m.

China’s local governments had 14.8 trillion yuan ($2.3 trillion) of hidden debt last year, and the figure could climb even further this year, according to a government-linked think tank.

Local governments were under pressure to increase infrastructure investment and shore up growth through the pandemic, leading to a 6% rise in off-budget borrowing from a recent low of 13.9 billion yuan in the third quarter of 2019, according to Liu Lei, a senior researcher at the National Institution for Finance and Development.

The hidden debt is comprised of funds raised by government-related entities for infrastructure and other public projects that carry an implicit official guarantee of repayment. Bonds sold by local government financing vehicles, or LGFVs, are one way provincial authorities raise money to increase spending without including it on their official balance sheets.

China has vowed to stabilize its macro leverage ratio and lower the government debt ratio this year to rein in risks. That could be hard to achieve as on-budget spending can’t cover the investment needed to drive the economy’s targeted growth by 2035, said Liu, whose organization is under the influential state-run Chinese Academy of Social Sciences and advises the government.

“Local governments will find ways to increase hidden debt because they are under pressure to expand investment,” Liu said in an interview. “In the longer term, the economy still faces lots of headwinds, including an uncertain external environment and an aging population.”

Technically Illegal

China doesn’t have an official account of local governments’ hidden debt, as it’s technically against the law. Estimates by different institutions could vary significantly. One estimate by S&P Global Ratings in 2019 put the size at 20 trillion yuan, while another that same year from Rhodium Group put it at 41.2 trillion to 51.7 trillion yuan.

Liu’s calculation includes bonds issued by LGFVs and borrowing by government-linked trust funds, insurers and other investment firms. It doesn’t take into account bank loans to LGFVs, which may be used on commercial projects instead of public welfare projects.

Local government will have to repay a record high 2.14 trillion yuan worth of LGFV bonds maturing this year, Bloomberg calculations show.

The hidden debt could have led to more than 700 billion yuan a year in extra interest payments, as such borrowing is more costly to service than government bonds, he said. It also creates risks to the stability of China’s financial system, as all kinds of financial institutions -- including banks, brokerages and trust funds -- have bought the debt, Liu added.

Last year’s increase came after debt declined from a peak of 16.6 trillion yuan in 2016, as authorities transformed some of the borrowing into government bonds and moved them onto official balance sheets.

Translation

據與政府相關的智囊團稱，去年中國地方政府的隱性債務為14.8萬億元人民幣（2.3萬億美元），今年這一數字可能還會進一步攀升。

國家金融與發展實驗室(NIFD)資深研究員劉磊 (Liu Lei) 表示，地方政府承受著增加基礎設施投資, 和在大流行中支撐增長的壓力，導致預算以外借款從2019年第三季度的近期低點139億元增加6％。

隱性債務包括政府相關實體, 為基礎設施和其他公共項目籌集的資金，而這些資金是帶有隱性官方還款保證。由地方政府融資平台(LGFV)出售的債券, 是省級當局籌集資金以增加支出, 而不用將其納入官方資產負債表的一種方式。

中國誓言要穩定其宏觀槓桿比率，並在今年降低政府債務比率以控制風險。劉磊的國家金融與發展實驗室有向政府提供建議, 但其影響力亦受國營公司国社会科学院 (CASS) 所影響, 他說由於預算內支出無法涵蓋到2035年推動經濟目標增長所需的投資，中國的誓言可能很難實現。

劉在接受採訪時說：“地方政府將找到增加隱藏債務的方法，因為它們承受著擴大投資的壓力。” “從長遠來看，經濟仍將面臨許多不利因素，包括不確定的外部環境和人口老齡化。”

技術上這是非法的

中國沒有官方記錄地方政府的隱性債務，因為從技術上講這是違法的。不同機構的估計可能會有很大差異。標準普爾全球評級公司（S＆P Global Ratings）在2019年做出的一項估算為20萬億元人民幣，而Rhodium Group在同年做出的另一項估算為41.2萬億至51.7萬億元人民幣。

劉的計算包括地方政府融資平台發行的債券以及政府相關信託基金，保險公司和其他投資公司的借款。它沒有考慮到對LGFV的銀行貸款，這些貸款可能用於商業項目，而不是公益項目。

彭博社（Bloomberg）的計算顯示，地方政府將不得不償還今年到期的價值2.14萬億元的創紀錄高水平的地方政府融資平台(LGFV)債券。

他說，這些隱性債務每年可能導致超過7000億元人民幣的額外利息支付，因為這種借款比政府債券的償還成本更高。劉補充說，這也給中國金融體系的穩定帶來了風險，因為包括銀行，券商和信託基金在內的各種金融機構都購買了這些債務。

去年的增加是在債務從2016年的16.6萬億元人民幣的頂峰下降之後出現，因為當局將部分借款轉換為政府債券，並將其轉移到官方資產負債表上。

       So, the Chinese government has a large number of hidden debts. I am interested in knowing how will the Chinese financial experts handle this.

Note:

a.  Local government financing vehicle (LGFV) (Chinese: 地方政府融资平台) is a funding mechanism by a local government in China. It usually exists in the form of an investment company that sells bonds in the bond markets to finance real estate development and other local infrastructure projects.

b. Rhodium Group in its web-site says that it is an independent research provider combining economic data and policy insight to analyze global trends. Rhodium claims to provide original, independent research, data and analytics on a range of critical global topics – from Chinese economic development to global climate change - to the public, corporate, financial, government, philanthropic and non-profit sectors.