@nytimes reporter covering China and Asia, but mostly China. Got a tip? alexandra.stevenson@nytimes.com GPG
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This is a story about Ruzhou, a city addicted to debt. It borrowed until it could no longer pay the bills and then it asked its nurses and doctors to stump up cash. It’s just one of the many hidden faultlines in China’s economyhttps://nyti.ms/2p7jkCb
Here’s the problem: govts like this one borrowed for years to create jobs. Much of the money went to building vanity projects — sprawling complexes that often end up empty. As debt soared, regulators tried to tamp down but places like Ruzhou found new & more risky sources of $$
It’s a little like whack-a-mole. “Officials stop one today, and they come up with another tool tomorrow” is how one expert put it. Here’s the most shocking part. Much of the debt is hidden, and by some estimates could be as much as $8 trillion. That’s half of China’s GDP last yr
So officials are trying to force local gov’ts to come clean about their debts. Now comes the double whammy for cities like Ruzhou. China’s economy has slowed by its most in 3 decades which means they can’t grow out of their problems. And Beijing has turned off the lending taps
Which is why for a brief moment earlier this year, Ruzhou appeared to go to its nurses and doctors for money. But when I traveled there with @caocli this summer, we didn’t know any of this. We were just hunting for white elephants
But we left with a police escort. More on that here: https://nyti.ms/2X06qCx But back China’s debt problems. Ruzhou is just one of many cities and towns that appear to be running out of money
Here’s why it matters: “Imagine the economy is a ship like the Titanic,” one analyst told us. “Local government debts are like cargo containers piled up on its deck. There are already lots of cargo containers piling up.” Read more herehttps://nyti.ms/2p7jkCb
that wz interesting. i'm surprised someone went on record.
noted, but it very much depends on locale, i know some hospitals inside china doing very well and i also know some hospitals in USA barely hanging in there, waiting to be merged or go under.
Municipalities defaulting on debt is not unusual by itself. It’s the scale here that is intresting.
If China in great debt..dont ask china to bail US for second time lady..
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