Fiscal Vulnerabilities and Risks from Local Government Finance in China

January 14, 2014

Preview Citation

Format: Chicago

Yuanyan S Zhang, and Steven A Barnett. Fiscal Vulnerabilities and Risks from Local Government Finance in China, (USA: International Monetary Fund, 2014) accessed July 7, 2025

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

China weathered the global financial crisis better than most, thanks to a large and timely stimulus. This stimulus, however, was mainly in the form of off-budget infrastructure spending and thus not visible in the headline fiscal data. We construct a time series for the augmented fiscal deficit and debt—augmented to include off-budget activity—that better illustrates the counter-cyclical role of fiscal policy. The results also show that the augmented fiscal deficit and debt are both considerably higher than the headline government data suggest. Nonetheless, at around 45 percent of GDP, the augmented debt is still at a manageable level.

Subject: Contingent liabilities, Fiscal policy, Government debt management, Infrastructure, National accounts, Public debt, Public financial management (PFM)

Keywords: Augmented fiscal deficit, Balance sheet, Bank loan, China, Contingent liabilities, Debt estimate, Debt issuance, Debt shock, Debt stock, Debt sustainability, Fiscal deficit, Fiscal Risks, Fiscal Vulnerabilities, Global, Government debt, Government debt management, Government debt stock, Gross Financing Needs, IMF staff estimate, Infrastructure, Land Finance, LGFV debt, Local government, Local Government Finance, Maturing debt, Net proceeds, SOE debt, WP

Publication Details

Pages:

29
Volume:

---
DOI:

---
Issue:

---
Series:

Working Paper No. 2014/004
Stock No:

WPIEA2014004
ISBN:

9781484349953
ISSN:

1018-5941

IMF’s Work

RESOURCES

TOPICS

Flagship Publications

Other Publications

IMF reports and publications by country

Regional Offices

All News

See Also

For Journalists

Press Center

RESOURCES

FLAGSHIPS

KEY SERIES

IMF NOTES

IMF Working Papers