The Balance Of Local Debt In Guangzhou, China Soared By Almost $14 Billion In One Year

On January 8, Taiwan media reported that real estate enterprises in Communist China went bankrupt and defaulted one after another, directly affecting local finances. Take GuangZhou, a first-class city, as an example. In 2022, Guangzhou’s land grant revenue decreased by 32% per year, while the balance of local debt soared. According to the budget implementation for 2022 and the draft budget for 2023 submitted by the Guangzhou Municipal finance Bureau on the 7th, the budget revenue of the city’s government funds last year was $24.5 billion in USD, a decrease of 31.8%. The decrease in revenue was mainly due to the lower-than-expected land grant revenue.

 While income declines, debt is soaring. To raise financial resources and expand public expenditure, Guangzhou has increased its efforts to issue bonds. In 2022, the Guangdong Provincial Department of Finance transferred loans to the local government of Guangzhou to add $13.8 billion in bonds, which greatly increased the balance of local bonds in Guangzhou, from $5.6 billion in 2021 to $68.7 billion at the end of 2022, an increase of about $13.7 billion.

 Looking forward to 2023, Guangzhou’s land market is still not optimistic. According to the draft budget, Guangzhou’s land grant revenue is expected to be $21.8 billion this year, down 5% from the actual figure in 2022. The budget expenditure of the city’s government fund has been greatly reduced by 27% at the same time as the city’s land grant revenue in 2023 was expected to decrease by $12.2 billion in the first quarter compare to 2022.