Xi unveils plan to address China’s $14tn debt crisis
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The news: President Xi Jinping flagged plans to address the debt crisis facing China’s local governments on Sunday, following the Communist Party’s Central Committee meeting last week, Bloomberg reported citing a resolution published by state news agency Xinhua.
The long-term blueprint involves redistributing more revenue to regional authorities by gradually increasing their share of consumption tax and giving city governments more autonomy to regulate property markets.
The 60-point document, which outlines mostly known ambitions, was based on decisions made at the four-day plenum that ended on 18 July. The plans were described as “vague” by some academics and it garnered a tepid response from investors.
Other flagged measures include a gradual increase in the retirement age and reforms to improve private sector access to finance.
The numbers: The world’s second-largest economy faces mounting pressure to tackle the 66 trillion yuan ($13.5 trillion) hidden debt of its local governments and to rebalance the economy, amid criticism from foreign leaders for relying on exports to offset sluggish domestic demand.
The context: Allocating a larger share of consumption tax to regional authorities could help address these challenges by encouraging increased consumer spending and providing additional financial resources for local governments.
At the conclave, national security was given a “more prominent” position, Xi said in a statement, as he reinforced his long-term vision for economic growth and high-quality development.
The resolution prioritises mechanism for countering sanctions, safeguarding maritime interests and upgrading the military, Asia Nikkei reported. It also signals a potential expansion to Beijing’s surveillance architecture, vowing to “explore and establish a national unified population management mechanism,” Bloomberg said.
The sources: Bloomberg , Asia Nikkei
