中國地方政府面臨 2 萬億美元債務的緊縮

Recently Yahoo News on-line reported the following:

China’s Local Governments Face Squeeze From $2 Trillion in Debt

Fri, November 25, 2022 at 5:00 a.m.

(Bloomberg) -- Signs are growing in China that local government debt burdens are becoming unsustainable.

China’s 31 provincial governments have a stockpile of outstanding bonds that’s close to the Ministry of Finance’s risk threshold of 120% of income. Breaching that line could mean regions will face more regulatory hurdles to borrow, hampering their ability to drive up economic growth.

In addition, local authorities will face a massive maturity wall over the next five years as bonds worth almost 15 trillion yuan ($2.1 trillion) -- more than 40% of their outstanding debt -- fall due.

While there’s little risk of provincial governments defaulting, they will run into increasing difficulty in repaying their debts. More and more bonds will need to be sold to roll over maturing ones rather than to finance new spending and as a result, investment growth may suffer.

A major cause of the financial squeeze is the property crisis. Revenue from land sales -- which in the past made up about 30% of local governments’ income -- has plummeted. On top of that, trillions of yuan in tax breaks were doled out to businesses to help them cope with the economy’s slowdown over the past few years.

The central government recently acknowledged for the first time concerns about special local bond repayment risks, urging Shenzhen, the technology hub that neighbors Hong Kong, to consider setting up a provision fund to prevent debt payment risks. Shenzhen’s finances are in better shape than many other cities or provinces, and it’s a sort of test area for fiscal reforms.

At an October meeting of the standing committee of the National People’s Congress, the country’s parliament, some delegates warned it would be “difficult to repay as scheduled” local government debt maturing in the next couple of years. They called for contingency plans to be made early.

Under Pressure

Economists like Ding Shuang at Standard Chartered Plc say the national government should take on more of the debt burden by borrowing more. Yu Yongding, a former central bank adviser, and other economists made a similar call in a report earlier this month, saying the central government should sell more debt, particularly of general bonds which could be used to invest in infrastructure.

“It should be the central government, rather than provinces, to add leverage -- regional finances have turned quite weak over the past few years,” Ding said. “The government will come under more and more pressure to make the change. It is a matter of time.”

China set the risk threshold for provincial debt at 120% of their “comprehensive financial resources” -- widely regarded as the combined income from the general public budget and the government fund budget, as well as transfer payments from the central government.

Pandemic Stimulus

Before 2020, the ratio was fairly stable, with Beijing’s push to curb debt helping to bring it down slightly. The ratio has surged since then as the government ramped up fiscal stimulus during the pandemic. Provincial debt jumped to 118% of income by the end of September from 83% in 2019, according to Bloomberg calculations based on official data.

Local governments’ revenue, by contrast, has weakened substantially, largely due to the property slump and the plunge in land sales. The annual increase in overall local income weakened to just 2.5% last year, compared with 7.1% in 2019 and double-digit growth in the two years prior to that.

“The stubbornly faster growth of explicit government borrowing than the authorities’ financial resources means their debt pressure will continue to rise,” Yewei Yang, chief bond analyst at Guosheng Securities Co. wrote in a November note. “That will pose new challenges to the room for fiscal policy in future and fiscal health and stability.”

To bring overall borrowing below the threshold, high-risk regions will be required to curb the size of their investment projects, cut public spending, and dispose of assets, according to a report by the Ministry of Finance. Some provinces, such as Anhui in central China, have already moved to ban risky areas from adding new debt.

The fastest growing portion of provinces’ debt pool is special bonds. These are funds mainly raised to finance infrastructure investment, which helps to drive economic growth. Nearly 11 trillion yuan of new special bonds have been issued since 2020, more than double what was sold in the five years from 2015, when local governments were first allowed to issue the notes on their own.

Next year will be particularly challenging for local governments’ finances. Some 3.65 trillion yuan of bonds are maturing in 2023, a record high for any single year and an amount as large as this year’s new special bond quota.

Even interest payouts are a growing problem. Interest payments on special bonds reached 479 billion yuan in the first nine months of the year, equivalent to 6.2% of spending under the government fund budget. A level above 10% will trigger fiscal restructuring -- as happened to Hegang city late last year -- forcing local governments to tighten their purse strings, including by freezing hiring, according to rules published in 2016.

If the central government issues more general bonds to fund infrastructure projects, it would have to let the official fiscal deficit balloon from its current levels of about 3% of gross domestic product. The official deficit has been kept low because the government is cautious about expanding general bond sales, preferring to allow provinces to issue more and more special notes.

Standard Chartered’s Ding estimates the broad fiscal deficit will reach 7.3% of GDP this year if special local bonds are included.

 “Such a high ratio is unsustainable,” he said.

 Translation

（彭博社） - 中國越來越多的跡象表明，地方政府的債務負擔正變得不可持續。

中國 31 個省級政府的未償債券存量接近財政部規定的收入 120% 的風險門檻。突破這條線可能意味著各地區將面臨更多的借​​貸監管障礙，從而阻礙它們推動經濟增長的能力。

此外，由於價值近 15 萬億元人民幣（2.1 萬億美元）的債券 - 超過其未償債務的 40% - 到期，未來五年地方當局將面臨巨大的期限壁壘。

雖然省級政府違約的風險很小，但它們在償還債務方面會遇到越來越大的困難。需要出售越來越多的債券來延續到期債券，而不是為支持新的開支，因此投資增長可能會受到影響。

金融緊縮的一個主要原因是房地產危機。過去約佔地方政府收入 30% 的土地出讓收入大幅下降。最重要的是，地方政府已向企業發放了數万億元人民幣的稅收減免，以幫助他們應對過去幾年經濟放緩的情況。

中央政府最近首次承認對地方特別債券償付風險的擔憂，敦促毗鄰香港的科技中心深圳考慮設立撥備基金以防範償債風險。深圳的財政狀況好於許多其他城市或省份，是財政改革的試驗區。

在全國人民代表大會常務委員會 10 月的一次會議上，一些代表警告說，未來幾年到期的地方政府債務 “難以如期償還” 。他們呼籲儘早制定應急計劃。

在面對壓力

渣打銀行的Ding Shuang 等經濟學家表示，中央政府應該通過增加借貸來承擔更多的債務負擔。前央行顧問Yu Yongding 和其他經濟學家在本月早些時候的一份報告中也發出了類似的呼籲，稱中央政府應該發行更多債券，尤其是可用於投資基礎設施的一般債券。

Ding Shuang 說: “應該是中央政府而不是各省來增加槓桿 - 過去幾年地方財政變得相當疲軟”; “政府將面臨越來越大的壓力來做出改變。這是時間上的問題。”

中國將省級債務的風險門檻設為其 “綜合財力” 的 120% - 普遍認為是一般公共預算和政府性基金預算收入的總和，再加上來自中央政府的轉移支付。

病毒大流行中財政刺激

在 2020 年之前，該比率相當穩定，北京推動抑制債務有助於使其略有下降。自那時以來，隨著政府在病毒大流行期間加大財政刺激力度，該比率飆升。彭博社根據官方數據計算得出，截至 9 月底，省級債務佔收入的比例從 2019 年的 83% 躍升至 118%。

相比之下，地方政府的收入大幅減少，這主要是由於房地產市場低迷和土地銷售暴跌。去年地方總收入的年增長率降至僅 2.5%，而 2019 年為 7.1%，此前兩年的增長率為兩位數。

Guosheng Securities Co.首席債券分析師 Yewei Yang 在 11 月份的一份報告中寫道： “政府公開借款的增長速度頑固地快於當局的財政資源，這意味著他們的債務壓力將繼續上升”; “這將對未來財政政策的空間和財政健康穩定構成新的挑戰。”

財政部的一份報告稱，為了將整體借款控制在臨界點以下，高風險地區將被要求控制投資項目規模、削減公共支出和賣掉資產。一些省份，例如中國中部的安徽省，已經開始禁止風險地區增加新的債務。

各省債務池中增長最快的部分是專項債券。這些資金主要用於資助基礎設施投資，這有助於推動經濟增長。自 2020 年以來，已發行近 11 萬億元人民幣的新專項債券，是自 2015 年地方政府首次獲准自行發行票據後五年發行量的兩倍多。

對地方政府的財政來說明年尤其具有挑戰性。 2023年到期債券約3.65萬億元，創單年新高，與今年新增專項債券額度一樣大。

甚至利息支出也是一個日益嚴重的問題。 今年前9個月專項債券付息4,790億元，佔政府基金預算支出的6.2%。 根據 2016 年發布的規定，高於 10% 的水平將引發財政重組 - 就像去年底 Hegang市發生的那樣 - 迫使地方政府收緊財政，包括凍結招聘。

如果中央政府發行更多的一般債券為基礎設施項目提供資金，就必須讓官方財政赤字從目前佔國內生產總值 3% 左右的水平急增。 官方赤字一直保持在較低水平，因為政府對擴大一般債券銷售持謹慎態度，寧可允許各省發行越來越多的特別票據。

渣打銀行的 Ding Shuang 估計，如果包括特別地方債券，今年的廣義財政赤字將達到 GDP 的 7.3%。

他說: “這麼高的比例是不可持續的” 。

So, in China many provincial governments have a stockpile of outstanding bonds that’s close to the Ministry of Finance’s risk threshold of 120% of income. Breaching that line could mean regions will face more regulatory hurdles to borrow, impacting their ability to keep up economic growth. Next year will be particularly challenging for local governments’ finances. Some 3.65 trillion yuan of bonds are maturing in 2023, a record high for any single year and an amount as large as this year’s new special bond quota. Even interest payouts are a growing problem. Interest payments on special bonds reached 479 billion yuan in the first nine months of the year, equivalent to 6.2% of spending under the government fund budget. All these show that the China will have tight budgets in the years to come.