Inner Mongolia Region Is Struggling to Fund Basic Services as Debt Crisis Looms

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The Alukerqin Banner in Inner Mongolia.

Facing mounting debt, the Alukerqin Banner government in China’s Inner Mongolia has warned of impending credit defaults, saying it can barely pay for basic public services, staff salaries and operational expenses this year.

The Alukerqin Banner’s fiscal budget report for the first half of 2024 reveals that its hidden debt consists entirely of bank loans and various funds, with extremely limited revenue sources and no financing channels other than bonds. It is in significant risk of a credit default if additional money is not secured.

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The Alukerqin Banner government in Inner Mongolia is facing severe financial distress, struggling to pay for basic services, staff salaries, and operational expenses.
Its fiscal challenges are exacerbated by limited revenue sources, declining income from land sales, and an inability to secure additional funding beyond bonds.
The region is at significant risk of credit default, reflecting a broader issue of local governments misappropriating funds to manage debt and essential expenses.

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What Happened When

2019 to 2023：: Revenue from government-managed funds, primarily driven by land sales, drops by nearly 40%.

2023：: The Alukerqin Banner enters the orange warning range for debt risk.

By 2023：: The central government drives to resolve mounting debt in the provinces, tightening funding pressure on high-risk debt regions such as Inner Mongolia.