this post was submitted on 05 Dec 2023
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[–] [email protected] 1 points 11 months ago

This is the best summary I could come up with:


China’s ability to repay its government borrowing has been downgraded by the credit rating agency Moody’s, which said the ripple effects from a crisis in the property sector would undermine efforts to revive its flagging economy.

Moody’s warned that Beijing would need to bail out local and regional governments and state-owned enterprises that were struggling with rising debts, hampering efforts to boost investment and growth.

The rating agency downgraded its outlook for Chinese sovereign bonds from stable to negative on Tuesday, sending a signal to potential lenders that the risk of a default by Beijing has increased over the past year.

The world’s second-biggest economy had been slowing before a 2020 crackdown on excessive borrowing that followed a series of debt defaults by dozens of property developers.

State enterprises that need loans to fund expansion have struggled to access credit from lenders affected by growing property defaults.

China’s bounce back from the Covid-19 pandemic has faltered this year after an initial burst of activity – in part from bumper exports of coal to replace banned Russian gas – faded faster than expected.


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[–] [email protected] -1 points 11 months ago

Collapse in 30 days, trust me guys.

[–] [email protected] -2 points 11 months ago

Oh no, everyone has a home and real estate speculation is all but banned. Cry me some more crocodile tears Wall Street.

[–] [email protected] -3 points 11 months ago (2 children)

Moody’s warned that Beijing would need to bail out local and regional governments and state-owned enterprises that were struggling with rising debts, hampering efforts to boost investment and growth.

The USA does this all the time and it's considered great and wise domestic policy

[–] [email protected] 2 points 11 months ago

I'm not sure I'd say it's the same. The US bails out the revered private corporation. Moodys is one hundred percent on board with that.

With SOEs and governments there's no major shareholders who stand to win, so there's no reason for a bailout by their logic.

[–] HobbitFoot 1 points 11 months ago

The US government has never had to bail out a state since the revolutionary war. There were city loans and company bailouts, but nothing as large as a state.

The problem is also the reason why. Chinese cities and provinces can't self raise money, so they have been relying of SOE's to raise money to fund their budgets. Given that future growth projections, both economic and population, can't sustain the economics used to fund city and provinces like they used to, China is going to need to radicaly change how it taxes its populace.