Chongqing’s wealth based on sky-high debts – Victor Shih

Disposed Chongqing leader Bo Xilai might have left behind a more prosperous city, that wealth comes at a price, as Chongqing’s debts are far higher than China’s average of already high liabilities, tells financial expert Victor Shih in the Wall Street Journal.

The Wall Street Journal:

Those debts likely represent only part of Chongqing’s obligations, analysts say, because state-owned enterprises and property developers have liabilities of their own. The figures also exclude a number of smaller investment vehicles.

“I don’t think it would be a stretch to say that Chongqing local government, state-owned enterprises and state-owned developers collectively owed 1 trillion yuan at the end of 2011,” says Victor Shih, an expert on China’s local-government debt at Northwestern University. That estimate, based on Mr. Shih’s own look through the records of Chongqing’s financing vehicles, would put local-government debt in Chongqing at 100% of gross regional product, far higher than the 22% level for China as a whole, according to numbers from China’s national audit office.

More in the Wall Street Journal

Victor Shih is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers’ request form.

More on Victor Shih and China’s debts at Storify.