IMPACT
China’s central government has taken a more active and resolute attitude to solve the hidden debt problem, which has achieved positive results. However, the transformation of local government financing platforms is full of uncertainty, therefore the challenges of future implicit debt resolution have still to be met. As many developing countries are facing an increasing debt burden, China’s exploration and experience in defusing local government debt risk may be of use to debt management and debt transparency in other countries.
ABSTRACT
Since China’s central government officially commented on the implicit debt in 2017, the government has been trying to eliminate the ‘off balance sheet’ or hidden debt. This article discusses the origin of implicit debt in China, the typical forms of implicit debt, the regulatory policies to make this debt transparent and bring it onto the balance sheets, as well as the effect current policies have had on the sources of debt. This article shows a comprehensive picture of the past, present and looks at the future of implicit government debt in China.
Acknowledgements
This article is supported by the National Social Science Fund of China (Grant number 22BGL055).
Disclosure statement
No potential conflict of interest was reported by the authors.