Government Debt | South China Morning Post
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  • Jan 31, 2015
  • Updated: 3:26am

Government Debt

Premiums drop for top Chinese firms' debt

Aluminum Corp of China sold February 2014 debt at 3.75 per cent last month. Photo: Reuters

Top-rated companies on the mainland are paying the lowest premiums to sell debt in nearly 27 months, showing investor confidence in state-backed firms even as the overall economy flags.

Friday, 7 June, 2013, 3:46am

IMF warns China of risks in investment binge

Spending on highways, along with other big-ticket projects, ensures that local government debts stay in the fast lane. Photo: Bloomberg

The International Monetary Fund has urged self-discipline on China's provincial and city governments, warning headlong investment fuelled by rapid credit growth may threaten economic sustainability. The IMF's alert underscores the challenges facing the mainland's new leaders as they seek to lessen financial risk while keeping economic growth stable.

30 May 2013 - 3:49am

Brazil offers Africa US$900m in debt relief

Brazilian president Dilma Vana Rousseff. Photo: Xinhua

Brazil is increasingly expanding its economic ties with Africa, a sign of how crises in the rich world are pushing faster-growing emerging economies to trade and invest among themselves, economists say.

27 May 2013 - 5:59am

iBonds are little help in easing inflation and a bad bet financially

iBonds are little help in easing inflation and a bad bet financially

The game show here is that our government offers a three-year HK$10 billion bond issue, available in allotments of HK$10,000, which pays a coupon of the rate of consumer price inflation or a minimum of 1 per cent. Given that bank deposits over the past four years have carried interest rates averaging between zero and nothing while the CPI has averaged 3.2 per cent year over year and is at present higher and threatening to go higher yet, the iBond is obviously not a bad bet.

19 May 2013 - 3:55am

Hong Kong to snap up government offer of inflation-linked bonds

The new 'iBonds' are expected to be sold with an underlying reference rate of inflation of 3.5 per cent and raise about HK$10 billion for the government. Photo: May Tse

The Hong Kong Monetary Authority's anticipated sale of a third tranche of inflation-linked bonds is set to meet with a rich vein of demand despite a recent decline in the rate of consumer price rises.

17 May 2013 - 6:35am

Guangdong warned over infrastructure spending

Guangdong plans to complete 17 intercity railway projects in the Pearl River Delta by 2015, costing 111.2 billion yuan. Photo: Xinhua

Guangdong's decision to invest 1.41 trillion yuan (HK$1.77 trillion) to beef up its infrastructure over the next three years has been described as dangerous by analysts, since the province is already knee-deep in debt.

25 Apr 2013 - 5:38am

Timing the key in Japan's massive gamble to revive the economy

Shinzo Abe, Japan's prime minister. Photo: Bloomberg

After two "lost decades", Japan has begun a risky monetary gamble. Abenomics has the potential to make or break Japanese savings, the Asian century and global recovery.

22 Apr 2013 - 1:58am

Premier pledges continued steady investment growth

Roads are high on Beijing's list of priorities, despite concerns over their profitability. Photo: May Tse

The mainland will continue to increase investment at a "reasonable" pace, Premier Li Keqiang was quoted as saying yesterday, while promising to control risks arising from the pile of local government debt.

18 Apr 2013 - 5:33am

Mounting local government debt a crisis in the making in China

The central bank should lead the new regulatory regime, and facilitate co-operation and information sharing such as with the China Banking Regulatory Commission. Photo: Bloomberg

Warning of local governments' high exposure to bad debts, credit agency Fitch recently downgraded China's long-term local-currency rating from AA-minus to A-plus. Chinese officials should take note: the downgrade underlines how closely international markets are watching developments in China.

18 Apr 2013 - 3:18am 1 comment

George Soros tempers praise for Beijing with warning on risks

George Soros attends a forum in Hong Kong. Photo: Thomas Yau

Billionaire investor George Soros, who has fallen foul of governments as far afield as Malaysia and Britain during a 60-year career, has praised China's system of financial regulation. But he warned that Beijing faces "exceptional difficulties" in its economic transition in the near term.

7 Apr 2013 - 9:30am 3 comments

China ignores at its own peril its hidden debt risks

China is now experiencing an elevated debt risk characterised by high levels of accumulated local-government and corporate debt. Photo: Reuters

Since China's era of reform and opening up began, the country has experienced three instances of large-scale public-finance problems. In the late 1970s, it faced a debilitating fiscal deficit. In the 1990s, its corporate sector was plagued by "triangular debts". Later that decade, financial institutions were burdened by bad debts generated by state-owned enterprises.

26 Mar 2013 - 3:28am

PBOC sounds warning over local government loans

Zhou Xiaochuan says 20 per cent of the loans to the financing vehicles need to be paid out of local governments' budgets. Photo: Simon Song

People's Bank of China governor Zhou Xiaochuan said attention needed to be paid to the development of local governments' financing vehicles and their hidden risks.

14 Mar 2013 - 7:47am

Fears raised over huge debts involved in Beijing's infrastructure plans

The railways ministry's debt doubled from 1.3 trillion yuan in 2009 to 2.66 trillion yuan. Photo: Bloomberg

The Ministry of Transport announced on its website yesterday that 397.4 billion yuan would be spent on roads, airports and ports this year, 0.1 per cent more than in 2012. The Ministry of Railways, in a bond prospectus, earmarked 650 billion yuan of capital expenditure on railways this year, 3 per cent up on last year.

7 Mar 2013 - 6:12am

Rail ministry's debts bring biggest freight fees rise in a decade

Freight charges accounted for 50 to 70 per cent of the Ministry of Railways' revenue.

The crushing debt burden of the Ministry of Railways has compelled Beijing to impose the biggest rise in rail freight tariffs in a decade. Although that may be bad news for freighters, it came as welcome news on the stock market.

21 Feb 2013 - 6:07am

Growing debt burden in mainland provinces causes concern

According to Moody's Ivan Chung, whether local governments will go bust will depend on the central government's readiness to share some of the burden. Photo: Xinhua

The debts of four provinces - Hubei, Jilin, Hainan and Hunan - are "fairly high" and may result in "high financial risks", said Terry Gao, an associate director at Fitch yesterday.

31 Jan 2013 - 2:40pm 2 comments

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