ANI
29 May 2023, 19:57 GMT+10
Hong Kong, May 29 (ANI): Largest city in central China -- Wuhan -- has publicly demanded that hundreds of local companies repay their debts, in an extremely rare move that highlights the dire financial situation many of the country's municipal governments are facing amid economic uncertainty, CNN Business reported.
The city's finance bureau said in a Friday statement published by the official Changjiang Daily newspaper that a total of 259 companies and entities owed it more than 100 million yuan (USD 14 million) combined. It urged them to pay their overdue debts as soon as possible.
The debtors or guarantors include state or privately-owned companies, government departments and think tanks, according to official media outlets quoting a screenshot of the newspaper.
The finance bureau said it was unsuccessful in collecting the debts and was offering rewards to anyone able to provide useful information about the debtors' financial assets.
The public announcement by Wuhan, which was at the epicenter of the COVID-19 pandemic that began in late 2019, is highly unusual and underscores the fiscal challenges facing China's local governments.
Chinese leader Xi Jinping's zero-Covid campaign has exhausted the budgets of many cities and provinces, after they spent billions of dollars on frequent Covid lockdowns, mass testing and quarantine centres before last December's policy U-turn. According to CNN Business, a real estate crash has exacerbated the problem, as local governments rely heavily on land sale revenues.
Analysts estimated China's outstanding government debts surpassed 123 trillion yuan (USD 18 trillion) last year, of which nearly USD 10 trillion is so-called "hidden debt" owed by risky local government financing platforms.
Due to tightening budgets, some cities have already slashed medical benefits to seniors, which sparked protests, according to CNN Business. Other vital services are at risk.
Wuhan's debt collection announcement came just days after the official financing arms of Kunming, the capital of Yunnan province, struggled to raise enough money to pay what they owed their bondholders. Yunnan is one of the most indebted provinces in the country, with its outstanding debt to fiscal income ratio hitting more than 1,000 per cent last year, CNN Business said.
Wuhan and Kunming are not the only city governments revealing the extent of their debt problems. According to CNN business, Guizhou, one of China's poorest provinces, publicly admitted defeat in April in trying to sort out its finances and appealed to Beijing for help to avoid default.
In Wuhan, the debtors included major companies such as Dongfeng Wuhan Light Vehicle, which is controlled by the city's state asset regulator, and Uni-President Enterprises, a Taiwanese food and beverage giant with significant operations in mainland China. (ANI)Get a daily dose of New Zealand Star news through our daily email, its complimentary and keeps you fully up to date with world and business news as well.
Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to New Zealand Star.
More InformationHONG KONG: China has fired back at the European Union in an escalating trade dispute by imposing new restrictions on medical device...
NEW YORK, New York - Monday's trading session saw mixed performances across U.S. and global markets, with several major indices posting...
WASHINGTON, D.C.: The U.S. government has granted GE Aerospace permission to resume jet engine shipments to China's COMAC, a person...
DUBAI, U.A.E.: Saudi Aramco is exploring asset sales as part of a broader push to unlock capital, with gas-fired power plants among...
MILAN, Italy: Italian regulators have flagged four non-EU countries—including Russia—as carrying systemic financial risk for domestic...
NEW YORK CITY, New York: With just weeks to spare before a potential government default, U.S. lawmakers passed a sweeping tax and spending...
HONG KONG: China has fired back at the European Union in an escalating trade dispute by imposing new restrictions on medical device...
NEW YORK, New York - Monday's trading session saw mixed performances across U.S. and global markets, with several major indices posting...
WASHINGTON, D.C.: The U.S. government has granted GE Aerospace permission to resume jet engine shipments to China's COMAC, a person...
DUBAI, U.A.E.: Saudi Aramco is exploring asset sales as part of a broader push to unlock capital, with gas-fired power plants among...
MILAN, Italy: Italian regulators have flagged four non-EU countries—including Russia—as carrying systemic financial risk for domestic...
NEW YORK CITY, New York: With just weeks to spare before a potential government default, U.S. lawmakers passed a sweeping tax and spending...