Caixin Online: Heading off a China-style subprime crisis
Warning of local governments’ high exposure to bad debts, the credit agency Fitch recently downgraded China’s long-term local-currency rating from AA– to A+.
Officials should take note: the downgrade underlines how closely international markets are watching developments in the country.
Local government debt is nothing new, but the amount has been modest — until recently. The government’s pursuit in 2008 of a 4 trillion yuan ($645 billion) stimulus package has pushed debt levels sky-high.
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