Posted on 09/17/2011 5:39:31 AM PDT by TigerLikesRooster
By staff reporters Zhang Yuzhe and Zhao Jingting 09.15.2011 13:24
Highway Builders Discover Dead End for Debt
Local governments that raced to start highway projects are now struggling to repay loans or even finish paving
Heavy reliance on bank loans by local governments to finance a 3-year-old, nationwide highway construction boom is showing an uglier side as short-term liquidity risks emerge.
Money from commercial bank loans with one- to three-year maturities poured into highway and other infrastructure projects between late 2008 and 2010. But in recent months, government financing vehicles that sponsored the projects and planned to borrow more money – either to pay old debt, or finish incomplete roads – have been left in the lurch.
That's because central government policymakers over the past year gradually slowed bank-credit faucets to a trickle, leaving highway projects and their sponsors difficult to access cash. New toll-collection limits have worsened financial forecasts for highway builders.
Work ground to a halt in June, for example, at 26 construction sites along an unfinished highway in Shaanxi Province slated to connect Yan'an and Wuqi. According to the Xi'an Evening News, the 10.8 billion yuan project began in 2008 and, if completed, would stretch 110 kilometers.
A Shaanxi Transportation Department official told Caixin the project had struggled financially from the start yet managed to sputter along with funds originally intended for other road projects. Similar funding problems have saddled other Shaanxi projects, he said.
(Excerpt) Read more at english.caing.com ...
P!
Highways. One more fund used well outside its intent and raided by congress to pay for other crap.
Social Security’s twin sister.
Chinese Economic Face-Palm: When even Americans give China an economic face-palm, you know the fail is epic.
Maybe Chicoms figure that if the hi-speed trains are falling apart...then the concrete in the highways is waaaay below standard.....heads WILL roll..literally..
The Chinese government is investing its money on stockpiling rare earth minerals, gold, oil, upgrading its weapons...
Mish (Mike Shedlock) publishes petroleum purchase and consumption statistics from Tim Wallace on a regular basis.
Wallace tracks this information as it is one of the basic numbers that indicate where the economy truly is.
Consumption has been down all year...way down, which indicates we’ve been in a recession most of the year (we all knew that anyway).
What this report indicates is that places like China — who were some of the higher consumers of petroleum (used to build and repair roads) — were doing so in a bubble environment.
What this means is that true consumption is even lower than the regular consumption statistics (that there was no real demand for it, only manufactured demand) and that the usage that was taking place was paid for by more borrow-and-spend economics but in this case pulling on a forward basis from the manufacturing (supply) side of the equation.
All in all, pretty bad news, and more evidence that what I’ve been saying for two years is true. China has been lying about their economic strength and they are in a huge bubble that is going to splatter ‘stuff’ all around the world when it bursts.
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