Trillions in local government loans extended in China
(12 February 2013 – China) China’s banks have had to reschedule around 70 percent of loans made to the country’s local governments, extending loans on infrastructure spending.
Banks have extended at least RMB 3 trillion (A$467 billion) of RMB 4 trillion in loans and interest rates.
Local governments had total outstanding loans of RMB 9.2 trillion in 2012 compared to RMB 9.1 trillion yuan in 2010.
Some 40 percent of all local government debt had been scheduled to mature in those two years, according to the government.
A government report said the implication of a stable outstanding loan volume is that the vast majority of local government loans that were to come due over the past two years have simply been extended.
Accounting for interest payments of 6 percent a year, local governments have paid back a maximum of about RMB 1 trillion.
China's local governments borrowed heavily with Beijing's consent to fund massive infrastructure spending at the heart of a RMB 4 trillion economic stimulus plan in 2008 in response to the global financial crisis.
This mammoth spend left local governments saddled with debts due to be repaid in many instances far earlier than the projects which the loans funded were due to be completed.
Local governments had total outstanding loans of RMB 9.2 trillion in 2012 compared to RMB 9.1 trillion yuan in 2010.
Some 40 percent of all local government debt had been scheduled to mature in those two years, according to the government.
A government report said the implication of a stable outstanding loan volume is that the vast majority of local government loans that were to come due over the past two years have simply been extended.
Accounting for interest payments of 6 percent a year, local governments have paid back a maximum of about RMB 1 trillion.
China's local governments borrowed heavily with Beijing's consent to fund massive infrastructure spending at the heart of a RMB 4 trillion economic stimulus plan in 2008 in response to the global financial crisis.
This mammoth spend left local governments saddled with debts due to be repaid in many instances far earlier than the projects which the loans funded were due to be completed.
Subscribe