The overall expense of maintaining national coronavirus prevention efforts is also growing. Most local governments in China have a limited financial budget. The expense of staying in centralised quarantine facilities, which was previously covered by the government, is now being paid by residents of Changshou District in the southwest municipality of Chongqing and Neijiang City in Sichuan Province.
According to a warning published on the government’s WeChat account on September 21, the price can reach as high as 300 yuan (US$40) per day in Changshou. For the majority of individuals, spending on a week’s stay becomes almost unattainable. Public transportation has also been interrupted in other areas, including Henan, Hunan, and Guangdong. Experts observe that local governments’ incapacity to manage fundamental services is demonstrated by how budgetary issues at the local level are reflected in practically every service.
A total of 415 billion US dollars’ worth of bonds offered by local government financing vehicles (LGFVs) will mature yearly between 2021 and 2025, or around 3 trillion yuan. Analysts claim that the repayment pressure has significantly increased. Local governments in China frequently employ LGFVs as a means of borrowing money, however the usage of the money is frequently poorly disclosed.
The Shanghai Clearing House notified earlier in the day that it had not received enough cash from the LGFV to satisfy its interest payment obligation, and on the evening of August 29, an LGFV in the Gansu province made a last-minute scramble to repay interest on a bond traded in the interbank market. The delayed interest payment prompted immediate concerns about the likelihood of a potential LGFV bond default in the listed market. China’s GDP (gross domestic product) growth is predicted to decline this year, making it unlikely that it would reach its yearly objective of ‘about 5.5 percent’.
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