China has been pushing for years to increase government spending, and many cities across the country are in debt but still spending money. In this respect writer The New York Times newspaper.
The publication cited China’s Shangqiu municipality as an example. Plans for the next decade are to increase spending on infrastructure expansion, although the region’s debts already far exceed its revenues. Thus, more highways, railways and industrial parks are being built, but the economic return of these activities is decreasing.
According to the newspaper, local governments have been envied for many years not only in China but also in other parts of the world. We are talking about the huge resources spent on the construction of the infrastructure. But now, due to challenges in the global economy, including those caused by the coronavirus pandemic, businesses have begun to pay less taxes and developers are less active in purchasing land.
According to market experts, excessive borrowing by local authorities to expand infrastructure is hampering the growth of the economy and dragging it to a dead end. But at the same time, authorities are interested in these projects, as they provide an immediate return in the form of new employment.
Based on data from analysts at Bloomberg, BloombergNEF and Baidu on Feb. reportedHe said the gradual recovery of the Chinese economy after a long Lunar New Year holiday has led to a significant increase in road traffic. Consumer spending in stores and restaurants has increased recently, but China’s sustainable economic growth is still questioned due to the real estate crisis.