Title
Debt Risk after the Reform: China’s Land-Backed Municipal Bonds
Abstract
Land-backed borrowing emerged as one of China’s major economic risks after the accumulation of local-government debts and the implementation of the CNY 4 trillion fiscal stimulus package in 2008. Despite the introduction of far-reaching debt reform and the reorganization of local-borrowing mechanisms in 2015, the era of land-backed debt increases and the leveraging of public-land resources is not yet over. As exemplified by the recent developments in China’s municipal-bond market, new mechanisms for land-backed borrowing were introduced on a trial basis in 2017 under the novel debt-management regime. By critically evaluating the introduction of land-backed municipal bonds, this paper sheds light on recent developments in local-government borrowing in China that have not been discussed in detail so far by the scholarship. My evaluation draws on an in-depth analysis of central and local policy documents issued after 2008, a dataset on municipal bonds issued after 2017, insights from preliminary field research trips, and secondary literature on the topic. I argue that the introduction of land-backed bonds reflects an attempt to strengthen the top-down control over local borrowing, with the leveraging of land necessarily being upheld due to institutional constraints and path dependency.
Keywords
local debtmunicipal bond marketsland-based financefinancial stabilitycentral-local relationsreal-estate market
Object type
Language
English [eng]
Persistent identifier
https://phaidra.univie.ac.at/o:1430126
Appeared in
Title
ASIEN: The German Journal on Contemporary Asia
Volume
158/159
ISSN
2701-8431
Issued
2021
From page
118
To page
133
Publisher
Deutsche Gesellschaft für Asienkunde e. V. (DGA)
Date available
2022-04-16
Date issued
2021
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