Chinese Towns’Hidden Debt at 3 Trillion Yuan

• Author: Yang Xinyun et al

According to statements made by Guangdong Academy of Social Sciences’ Pearl River Delta Economic Research Center Director Cheng Jiansan, indebtedness at the level of township of Guangdong province is “extremely serious.” A report from Guangdong Province-Realities Research Center states that the governments of the twenty townships in the Yunfu City is in debt of a total amount of exceeding one billion yuan, and on average, each town is in debt of 54,300,000 yuan.

A report by the National Audit Office states that the balance of the local governmental debt in all areas of the country is 10.7 trillion yuan. However, an independent research agency FOST presumes that the audit office clearly underestimated the extent of local government debt. If the township government is considered, the debt for all four levels of local government would be 13.5 trillionyuan.

The population of Duyang township of the Yunfu City in Guangdong, is 51 thousand, and the township’s debt is 20,910,000 yuan. From this, public road-related debt accounts for 23,020,000 yuan, debt related to construction projects accounts for 11,680,000 yuan, and education-related debt accounts for 5,270,000 yuan. The debt owed to Duyang Township General Economic Development Company for loans to develop the township’s enterprises and water conservancy construction of farmlands, and other projects, is 169,130,000 yuan. For a township with annual...