China’s local government debt may be almost 3 trillion yuan ($473 billion) higher than the figure given by the nation’s audit office, if loans taken out by township governments are included, the Economic Observer reported, citing research from an independent institute.
Borrowing by townships, an administrative tier of government below provinces, cities and counties, wasn’t included in a report by the National Audit Office in June that put debt from those three levels at 10.7 trillion yuan, the weekly newspaper said in a report on its website dated Nov. 12, citing Beijing Fost Economic Consulting Company.
At a total of 13.7 trillion yuan, or $2.2 trillion for those of you keeping score at home, that is only chump change at that level off Italy’s outstanding sovereign debt ($2.6 trillion). We’ve seen how these ticking debt bombs can upset markets and oust political leaders. China is fortunate not to have a democratically elected government that investors could force to resign, as they did in Italy and Greece.