Caixin
Aug 29, 2024 04:36 AM
ECONOMY

Chinese Localities Adopt ‘Sell Everything to Save the Day’ Policy to Ease Debt

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In the first half of 2024, Chongqing’s general public budget revenue grew by 12.2% year-on-year
In the first half of 2024, Chongqing’s general public budget revenue grew by 12.2% year-on-year

Chinese local governments are desperately seeking new revenue streams by leveraging government-owned assets to address mounting debt pressures and dwindling coffers.

A document from Bishan District in Chongqing, southwest China, went viral online, outlining the formation of a “Sell Everything to Save the Day” task force aimed at monetizing state-owned assets.

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  • Chinese local governments are monetizing state-owned assets to address debt pressures and declining revenue, with initiatives outlined in multiple regions including Chongqing, Gansu, and Inner Mongolia.
  • Fiscal challenges are exacerbated by declining tax revenues and reduced land sale incomes, highlighting a need for comprehensive debt-clearing plans.
  • Chongqing’s efforts in 2023 led to significant growth in non-tax revenue from asset disposals, while maintaining a focus on revitalizing state-owned assets for financial stability.
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What Happened When
2023:
Zhuozi County in Inner Mongolia managed to reduce debts of 1.3 billion yuan by asset disposal. Delingha City in Qinghai Province outlined plans to sell assets of eight government-owned enterprises to generate 113 million yuan.
July 2023:
The Politburo urged local authorities to guard against and mitigate debt risks by implementing comprehensive debt-clearing plans.
First half of 2024:
Chongqing’s general public budget revenue grew by 12.2% year-on-year, though the growth rate slowed 3.8 percentage points compared with 2023. Tax revenue growth dropped to 2.8%, while non-tax revenue surged by 31.2%, driven primarily by asset disposals.
July 2024:
The country’s national fiscal revenue contracted by 1.9% year-on-year. Local governments saw their land sale income fall to its lowest level in two years.
August 2024:
Dingxi city in Gansu urged local government-backed financing vehicles to step up asset disposals to pay off debt.
Monday, August 26, 2024:
The Ministry of Finance reported that local governments' debt risks had generally eased, with a declining trend in hidden debt.
Wednesday, August 28, 2024:
A staff member at the Bishan District Finance Bureau said he was unaware of the situation involving the 'Sell Everything to Save the Day' task force when contacted by Caixin.
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