Posted on 10/09/2011 6:02:06 PM PDT by decimon
CHENGDU/WUHAN, China (Reuters) - When China announced a nearly $600 billion package to ward off the 2008 global financial crisis, city planners across the country happily embarked on a frenzy of infrastructure projects, some of them of arguable need.
Chengdu, the capital of southwestern Sichuan province, answered the call for stimulus action with a bold plan for a railway hub modeled after Waterloo railway station in London.
Except London's Waterloo was not ambitious enough.
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China's local governments have piled up a mountain of bad debt, some of it to finance bridges to nowhere and other white elephant projects, which now threatens to constrict growth at a time when the global economy is sputtering. It is adding to other systemic risks in China, including a sharp downturn in the property market and a rapid rise in problematic loans.
Local governments had amassed 10.7 trillion yuan in debt at the end of 2010. The government expects 2.5 to 3 trillion yuan of that will turn sour, while Standard and Chartered reckons as much as 8 to 9 trillion yuan will not be repaid -- or about $1.2 trillion to $1.4 trillion.
In other words, the potential debt defaults could be even larger than the $700 billion U.S. bail-out programme during the 2008 crisis.
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(Excerpt) Read more at news.yahoo.com ...
Ping.
Most Asian indexes are up. The yuan’s going to be raised. Other net commodities exporters’ currencies going up. Someone doesn’t like the news. ;-)
China’s national government has a surplus. Globalism is evil. ;-)
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