Keynote Address: “A Perfect Storm: COVID, Collapse of the Property Sector, and Local Government Debt in China”

Dr. Jean Oi

William Haas Professor of Chinese Politics, Stanford University

President, Association for Asian Studies

Saturday, September 30, 2023
Chancellor Ballroom, I Hotel and Illinois Conference Center
MCAA Banquet 6:30 – 9:00 pm | Keynote 7:25 pm

Local government debt skyrocketed during the last years of China’s zero COVID polices and has continued to rise unabated, troubling Beijing and rattling international financial markets.

While COVID certainly raised expenditures for local governments, it was state policies during the pandemic to enforce fiscal discipline and deleverage the real estate sector that triggered growing mountains of local government debt.

The collapse of the real estate sector shrank revenues from land transaction fees that previously filled a huge hole in annual local government budgets and serviced existing debt.

The evaporation of land revenue during the already costly COVID lockdowns created a “perfect storm” that decimated local government budgets and ballooned local government debt, with no way out except to borrow more.