What’s new: Government debt balance in Southern China’s Guangdong province, one of the country’s economic powerhouses, amounted to nearly 3 trillion yuan ($422 billion) by the end of 2023, almost doubling the province’s public budget revenue that year, government data show.
The growing debt pile of Guangdong, China’s largest regional economy, highlighted the rising debt burden facing local authorities since the onset of the Covid pandemic. Local coffers have been squeezed by surging expenditures and slowing incomes.
Outstanding government debts totaled 2.99 trillion yuan by the end of 2023, rising 150% from the end of 2019, according to a budget report submitted by Guangdong provincial government to the local legislature.
The debt accumulation fell within the province’s borrowing target, and the overall debt risk is deemed safely manageable, provincial governor Wang Weizhong said.
The debt balance is 216% of Guangdong’s general public budget revenue in 2023, compared with 95% in 2019, the report showed. In 2023, the province’s public budget revenue rose 9.5% from 2019 to 1.4 trillion yuan.
In 2023, Guangdong’s debt repayments totaled 295.4 billion yuan, including 205.5 billion yuan for principals and 89.9 billion yuan for interest payments, according to the report.
The context: Guangdong’s economy expanded by 4.8% year-on-year to 13.6 trillion yuan ($1.9 trillion) in 2023, close to the size of Brazil’s economy in 2022.
According to a research report by China Credit Rating Co. Ltd., outstanding bonds issued by local governments across China amounted 40.5 trillion yuan by the end of 2023, expanding 16.2% from the previous year. Guangdong’s outstanding bond balance was 2.95 trillion yuan, the highest in the country.
According to the budget report, the Ministry of Finance has issued 344.9 billion yuan in debt quota to Guangdong for 2024, compared with a quota of 496.8 billion yuan in 2023. The province plans to prepare debt payments totaling g 241.5 billion yuan in 2024.
Contact reporter Han Wei (weihan@caixin.com)
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