SPEAKER: Professor Victor C. Shih, Northwestern University
Did China achieve the impossible by chalking up nearly 9 per cent GDP growth while maintaining deficit at a low level? The reality: only a small share of the 26 trillion yuan or so in central and local stimulus projects is financed out of Chinese government budget. To raise money for these stimulus projects, local governments set up some 8,000 local investment companies, which issued equity and bonds, and borrowed from banks.
Prof Shih estimates that local government investment companies have borrowed US$1.68 trillion dollars (11 trillion yuan). Local investment companies continue to take on more debt to finance projects. This debt is onerous for local governments, most of which run perennial deficits. Totting up the total debt of the Chinese government – rather than just official debt – China, in fact, has a relatively high debt-to-GDP ratio.
And this debt burden has other broader implications, Prof Shih will show. In the years to come, millions more urban residents will be forced to relocate so that land can be sold – to repay banks.
DATE: Wednesday, March 17th 2010
Cheung Kong Graduate School of Business 长江商学院
Oriental Plaza, 12th floor, Tower E3 (Ernst&Young Tower 安永大楼)
1 East Chang An Avenue, Beijing 100738, China
Tel: 010-85188552 (website)
中国北京市东长安街 1 号东方广场东 3 座 12 层
English map, Chinese map
ABOUT THE SPEAKER:
Professor Victor C. Shih is a political economist at Northwestern University specialising in China. An immigrant to the US from Hong Kong, Prof Shih received his doctorate in Government from Harvard University, where he researched banking sector reform in China with the support of the Jacob K. Javits Fellowship and the Fulbright Fellowship.
He is the author of a new book published by the Cambridge University Press entitled Factions and Finance in China: Elite Conflict and Inflation. It is the first book to probe the links between elite politics and banking policies in China. He has also written numerous articles for academic and business journals, including The China Quarterly, Comparative Political Studies, The Asian Wall Street Journal and The Far Eastern Economic Review. He is also frequent adviser to the private sector on the banking industry in China. His current research covers the dynamics of elite politics and local government debt in China.