The Big Call
A local financial time bomb
- Published 20 Aug 2009
Local government finances constitute the biggest single long-term risk to China's financial system.
When it comes to China's local government finances, several long words spring to mind; labyrinthine, byzantine and leviathan are a few. Each rung in the pyramidal administrative hierarchy from over 900,000 villages, to townships, to counties, to cities and finally to 32 provincial or regional governments, has its own budget, its own enterprises, its own pet projects and its own profit and loss accounts. Add into this complex system the fact that the performance of officials at each level is judged by their superiors mainly on the economic growth that they generate, and the motive for creative accounting becomes clear. It is well known that many local administrations keep several sets of books. This is what is hinted at by the old phrase, "Numbers make cadres, and cadres make up the numbers".
Login
If you are already an FTChinaConfidential subscriber, please log in below.
Other Articles on this Issue
-
Consumer China
Pharmaceuticals - a healthy course
Sinovac and swine flu
Sinopharm - a new contender
Simcere – not immune
Tongrentang – TCM bellwether
-
Forbidden City
Iron and awe
-
Financial China
Insurance - a structural play
Ping An - not so tranquil
China Life - in the balance
-
Funds Data
China zeal wavers
-
Postcard From No 528
Wobbling on the liquidity high wire
-
Capital Intensive China
Developers defy doomsayers
-
Guest Column
Bright prospects
-
The Best of Chinese Commentators
Inflation, inflation, inflation
Sovereign wealth
-
Editor's View
A moment of truth
- View issue
-CC-3.2.3a-prod

