China’s burst of local bond issuance is supposed to fund roads, affordable homes and other infrastructure developments that will help support its flagging economy. But there don’t seem to be enough projects around to spend the money on.
Provincial authorities had by the end of September already raised 92 percent of the 1.35 trillion yuan ($195 billion) worth of special infrastructure bonds that the central government has targeted for the entire year. The bonds, which are separate to provincial authorities’ budgets, are part of an attempt to counter the economic slowdown by financing projects from railwys to environmental facilities and affordable homes.
But analysis of bond data by Bloomberg News shows that about 42 percent of the total special bonds sold since August are earmarked for “land reserves,” which means compensating farmers for property acquisition or preparing the acreage for future development. In short, the economic boost of the debt creation will be less immediate than if it was used to build highways or redevelop sub-standard housing straight away.
Submitted October 22, 2018 at 08:50AM by NineteenEighty9 https://ift.tt/2J976i1
