Can what happened in Detroit because of unmanageable debt also happen in China?
The possibility of over-extended local governments is a concern there, apparently because of bankruptcy news from here, Beijing correspondent Kathleen McLaughlin writes in the Los Angeles Times.
The Chinese government announced that it would be undertaking a comprehensive audit of local debt in China, an issue that has worried economists and others for its potential to shake the world’s second-largest economy. China amassed local government debt as it powered steadily through the global financial crisis in 2008, and experts question whether local governments are now burdened with more than they can manage. . . .
Ye Qing, deputy chief of the statistics bureau in Hubei province, told the Beijing News that Detroit was a wake-up call for China’s central government, which moved into action soon after Detroit made its announcement.
