On the back of a large stimulus that kicked off in 2008, China was able to fare much better than the Western economies during the financial crisis. Chinese local governments went on a borrowing binge to drive large-scale infrastructure and property development and stave off a potential economic recession. The move was necessary at first, but later resulted in the snowballing of local debt. International rating agencies have downgraded China's creditworthiness over concerns surrounding China's local debts. The country itself has started a nationwide audit on its debts. Even though the exact figure is not readily available, China has made tackling its local debt a priority as part of its broader efforts to optimize the issuance of loans in the banking sector.
So how do experts assess the severity of China's local debt? How can China work to bring down its debt level?
Ni hao, you're listening to People In the Know, bringing you insights into the headline news in China and around the world, I'm Zheng Chenguang in Beijing.
We are joined by Professor Yin Xingmin, Vice Director of the China Center for Economic Studies at Fudan University in Shanghai, and Dr. Ann Lee, Adjunct Professor of Economics and Finance at New York University. She is also the author of What the U.S. Can Learn from China, an award-winning international bestseller.