China’s Local Government Credit Dilemma

China’s economic growth ‘miracle’ has begun to be overshadowed by the depletion of local governments’ credit capacity, which has crowded rising demand for social security expenditure and undermined the financial health and confidence of Chinese households

CHINA ECONOMY HOUSING Apartment buildings stand unfinished in Xinzheng City, Henan province on June 20, 2023. China’s real estate industry grew at lightning speed from the late 1990s and was a major component of the country’s economic expansion. But with growth slowing and debts swelling, authorities cut off access to easy loans in 2020, pummeling the sector and causing a record-breaking slump last year. (Photo: Pedro Pardo/AFP)