Chitchat PBOC official: China needs to copy USA and allow Detroit-style bankruptcies!

[kryonlight]

China needs Detroit-style bankruptcy as debt problems remain: central bank official

BEIJING (Reuters) - China needs to let local governments take responsibility for their finances, including allowing bankruptcies, as part of an effort to defuse their debt risks, a central bank official wrote on Monday.

Central government control of the scale of local government bonds should be eliminated, while responsibility to issue and repay bonds should be held by the city or county that will actually use the funds, Xu Zhong, head of the People’s Bank of China’s research bureau, wrote in a an editorial on the financial news website Yicai.

“Eliminate central government control on the scale of local government bond issues, expand the scale of local government debt issues,” Xu wrote.

“Whether (bonds) can be issued, and at what price, must be examined and screened by the financial markets. There does not need to be worry about local governments chaotically issuing debt.”

China’s top leadership decided at a meeting this week to take concrete measures to strengthen the regulation of local government debt next year as policymakers look to rein in a massive debt pile and reduce financial risks facing the economy.

The government needs to clarify responsibility as it explores a bankruptcy system for local governments, Xu wrote, as there is still an expectation that the central government will bail out those that run into fiscal problems.

“China must have an example like the bankruptcy in Detroit. Only if we allow local state-owned firms and governments to go bankrupt will investors believe the central government will break the implicit guarantee,” Xu wrote, adding that social services should be maintained.

The United States city of Detroit filed the largest-ever municipal bankruptcy in July 2013, with $18 billion of debt.

Xu also said that China should dismantle the hukou system of internal migration control, as free movement of people promoted equal access to public services and helped resolve imbalances in finances.

In a report published on Saturday, China’s National Audit Office said China should dispel the “illusion” that the central government will pick up the bill for local government debt.

But China should also increase the limit for local government debt as general government debt is primarily used for poverty relief spending, while also controlling spending on new projects.

“Financial institutions must not provide financing to projects without a source of stable operating cash flow or that do not have compliant collateral,” the office said.

 

[kryonlight]

Those chinks who put their savings into China's high-yield wealth management products are going to lose their monies. LOL!

 

[kryonlight]

China's debt problem is much larger. This is just the tip of the iceberg.

China Admits To Fake Data (Again) - Hidden Debt & Inflated Revenues

It's not the first time (and it won't be the last), but a recent nationwide audit found some local governments inflated revenue levels and raised debt illegally, once again crushing China's credibility on the global stage when it comes to economic performance.

As Bloomberg reports, ten cities, counties or districts in the Yunnan, Hunan and Jilin provinces, as well as the southwestern city of Chongqing, inflated fiscal revenues by 1.55 billion yuan ($234 million), the National Audit Office said in a statement on its website dated Dec. 8.

The inspection, which covered the third quarter, also found that five cities or counties in the Jiangxi, Shaanxi, Gansu, Hunan and Hainan provinces raised about 6.43 billion yuan in debts by violating rules, such as offering commitment letters.

The findings are a blow to China’s bid to rein in data fraud, which has been widespread in some of the poorer provinces where officials were incentivized to inflate the numbers as a way of advancing their careers.

Concern from investors wanting to be able to trust data out of the world’s second-largest economy led to the government trying to crack down on the practice, with President Xi Jinping saying in March that data fraud “must be throttled,” according to the state-run Xinhua News Agency.

While historically investors would rapidly shrug this news off and buy more stocks, with Chinese sovereign bond yields near their Maginot Line of 4.00%, losing credibility could be critical.

A new supervisory body was set up within China’s statistics office in April to bolster and ensure data authenticity and quality.

The country is also shifting to the latest United Nations-based statistical standard and using computers -- rather than local reports -- to calculate provincial gross domestic product, the chief economist said in September.

 

[syed putra]

I hope this will create more chinese prostitutes as their numbers seems to be declining.

 

[tanwahtiu]

More mina pros are welcome.

Mina real juicy wet and wild.

I hope this will create more chinese prostitutes as their numbers seems to be declining.