China's Major Tax Problem
Economics Explained
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Local Government Financing Platforms - The Problem Isn't the National Government
In two thousand and 19 local government financing bonds constituted 39 % of all outstanding bonds in china's domestic market. The other 60% was, up until recently, mostly made up of real estate bonds sold by the development companies that needed funding to build on land being leased out by these local governments. These local government financing platform bonds are deemed to be quite safe because they indirectly have the backing of the communist party. And it's unthinkable for many chinese investors that the government would default on their debts. This is a 19 trillion dollar bond market that is based on a system that requires perpetual growth.
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