China Herald: Chongqing's wealth based on sky-high debts

Victor Shih

Disposed Chongqing leader Bo Xilai might have left behind a more prosperous city, that wealth comes at a price, as Chongqing's debts are far higher than China's average of already high liabilities, tells financial expert Victor Shih in the Wall Street Journal.

The Wall Street Journal:

Those debts likely represent only part of Chongqing's obligations, analysts say, because state-owned enterprises and property developers have liabilities of their own. The figures also exclude a number of smaller investment vehicles.

"I don't think it would be a stretch to say that Chongqing local government, state-owned enterprises and state-owned developers collectively owed 1 trillion yuan at the end of 2011," says Victor Shih, an expert on China's local-government debt at Northwestern University. That estimate, based on Mr. Shih's own look through the records of Chongqing's financing vehicles, would put local-government debt in Chongqing at 100% of gross regional product, far higher than the 22% level for China as a whole, according to numbers from China's national audit office.

More in the Wall Street Journal

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More on Victor Shih and China's debts at Storify.