Moody’s warned that Beijing would need to bail out local and regional governments and state-owned enterprises that were struggling with rising debts, hampering efforts to boost investment and growth.
The USA does this all the time and it’s considered great and wise domestic policy
The US government has never had to bail out a state since the revolutionary war. There were city loans and company bailouts, but nothing as large as a state.
The problem is also the reason why. Chinese cities and provinces can’t self raise money, so they have been relying of SOE’s to raise money to fund their budgets. Given that future growth projections, both economic and population, can’t sustain the economics used to fund city and provinces like they used to, China is going to need to radicaly change how it taxes its populace.
The USA does this all the time and it’s considered great and wise domestic policy
I’m not sure I’d say it’s the same. The US bails out the revered private corporation. Moodys is one hundred percent on board with that.
With SOEs and governments there’s no major shareholders who stand to win, so there’s no reason for a bailout by their logic.
The US government has never had to bail out a state since the revolutionary war. There were city loans and company bailouts, but nothing as large as a state.
The problem is also the reason why. Chinese cities and provinces can’t self raise money, so they have been relying of SOE’s to raise money to fund their budgets. Given that future growth projections, both economic and population, can’t sustain the economics used to fund city and provinces like they used to, China is going to need to radicaly change how it taxes its populace.