The Chinese economy has serious problems, with youth unemployment data now hidden and its GDP growth data widely questioned. Despite various policies aimed at loosening market restrictions and attracting foreign investment, market confidence remains elusive, with investment and consumption still stagnant. In order to maintain services and meet targets set by the central government, authorities in economically underdeveloped regions in the central and western parts of the country, where local-government debts have exploded, have resorted to rather unconventional stimulus tactics, measures unimaginable to Western economists.
By Jeanette Tong and Evan Osborne – March 6, 2024
Turning Debts into Criminal Charges
After Mayi Jiayi, a female entrepreneur from Guizhou, built 10 government projects in Liupanshui City, she was owed a staggering 220 million yuan (US$33 million), which remained unpaid for eight years despite continuous collection efforts. The Shuicheng District government proposed settling the debt for 12 million yuan (US$1.7 million), an offer rejected by Mayi and her legal representatives. At the end of 2023, on the day of the hearing at the Guizhou High People’s Court, she was arrested on the always-useful and ever-available charges of provocation and causing trouble, sparking public scrutiny of the local government’s practice of turning debt-collection efforts into crimes.
This case highlights the dire consequences faced by heavily indebted provinces. Most projects undertaken by governments in underdeveloped regions remain unpaid due to lack of funds. Guizhou and Yunnan are both major players in infrastructure construction and now also in debt accumulation…
Source: https://www.yibao.net/2024/03/06/chinas-local-governments-unconventional-stimulus-tactics/