China’s $23 trillion local debt mess is about to get worse. A line of empty shops in Hegang, on March 31, 2023. The heavily indebted city was forced to undergo unprecedented financial restructuring. BLOOMBERG . Goldman Sachs Group estimates China’s total government debt is about $23 trillion, a figure that includes the hidden borrowing of thousands of financing companies set up by provinces and cities. Unlike a corporate debt restructuring, or a municipal bankruptcy in the U.S., a fiscal restructuring in China doesn’t imply creditors must take losses on what they’re owed. Problems are evident in other cities as well. Shangqiu, a city of 7.7 million people in China’s central Henan province, made headlines recently after almost shutting down its only bus service. In Wuhan and Guangzhou, proposed cuts to pensioners’ medical benefits prompted rare street protests earlier this year. Civil servants in wealthy cities like Shanghai are reportedly having their pay slashed. In Guizhou province, officials have begged Beijing for a bailout. Diya, a 33-year-old singer and music teacher who asked to be identified by his stage name, moved to Hegang two years ago from Shanghai - a place, he said, where “even if I try my best and work 24 hours a day, I won’t be able to make enough money to become rich or own a home.” He can now afford to own three properties in the city, including his current home, a 50-square-meter third-floor walk-up apartment for 40,000 yuan - about 1% of the cost of a similarly sized place in Shanghai. Outside the city’s largest hospital, a middle-aged orderly wearing green scrubs and a mask said her employers unilaterally changed her work contract from a government-run medical facility to a third-party vendor, reducing benefits like paid overtime for working on holidays. Her monthly wage of 1,600 yuan ($228) had been delayed by more than 10 days every month since late last year. “I’m upset about the situation,” said the woman, who asked not to be identified in order to talk freely about her work conditions, as she pushed a wheelchair loaded with flattened cardboard boxes to an outdoor recycling point. “Everything is so expensive. I can barely get three square meals a day.” Every day, a group of aging coal workers dressed in worn-out military parkas gather from dawn at a Hegang roadside. Shovels in hand, they hope to get work for the day loading coal onto trucks and trains. One of them, Zhang, said she can earn 100 yuan, or around $15, on a good day. But more often, she’s lucky to get just 10 or 20 yuan for “exhausting” work. “We have no subsidies, no pension,” said Zhang, 66, who asked to be identified by her surname. “I won’t retire unless I’m physically no longer able to work.”

​@@dongshengdi773 i see 😂. Jepang with 250% debt to gdp

​@@dongshengdi773 china Made 4000 km tol road and 1000 km HSR every year

​@@dongshengdi773 the fact that China can build 1 city, 4,000 km of highways and 1,000 km of high-speed rail every year. all on time and on budget.making their infrastructure 40% cheaper than built in other countries.if China suddenly stops now they are afraid they will lose their ability (economy of scale) in building infrastructure

Correct me if Im wrong, but civil servants in this type of government dont care about their wages, as its just peanuts, but they rather get wealth from other sources.

the fact that China can build 1 city, 4,000 km of highways and 1,000 km of high-speed rail every year. all on time and on budget.making their infrastructure 40% cheaper than built in other countries.if China suddenly stops now they are afraid they will lose their ability (economy of scale) in building infrastructure

@@notme943 In China, the civil service salaries is usually between USD 1600 to USD 3000++ for regular workers depending on the cities. Thats pretty good for a lot of Chinese. The reason why they were sought after is because of the perks and benefits that come with them (Housing, loan, child education, insurance, pension etc). You pretty much dont have to worry about anything hence the 'iron rice bowl' label. Until now that is.

love it when the """socialist""" country doesn't allow its workers to discuss their wages

@@evoluxman9935 oh, haven't you heard? It's Socialism with Chinese Characteristics.

And atleast japan is small enough those extra infructure can actually topped out and run out of physical projects to build. China can keep making up major projects for century if they wanted to.

@@AL-lh2ht Any country can make up infrastructure projects, the problem is whether it's worth it. Infrastructure doesn't just get built and stay there, it has to obtain constant funding to maintain its shape. At a certain point, this cost of maintenance gets so large it dwarves capital for investment. This is part of the "Solow model of economic growth". To go over this boundary in the Solow model, you need technological progress/better educated workforce. It's partly why post war economic booms were so strong in Japan and Germany. They no longer had to invest in the maintenance of old stock (given it was destroyed) and could build brand new ones thanks to access to international capital.

China went for high-speed rail to nowhere instead. Lol

@@somethinglikethat2176 China likes to boast that it does things fast. Fast is good, until you realize you’re traveling fast in the wrong direction. High speed rail to bankruptcy. Ha

Chinese car industry is the fastest growing in the world. Africa is becoming the warehouse/factory of ASIA FOR A REASON - they need cheap goods. Don't believe the propaganda, it's not going well for us in the West... we can't figure out how many genders there are.

Yeah the yanks have learnt that one

@@firesideshats Yep. Just fixing our existing infrastructure, nevermind building more, is gonna cost us trillions of dollars. I mean it needs to be done, but still.

Bingo. Revenue comes from land sales. They arent selling anything right now. 70 year mortgage? Not even helping.

@@firesideshats The yanks infrastructure long paid for itself.

Don’t worry there are billions of Chinese slaves who are willingly exploited by their government as long as the brain washing does the job

Also they have over counted their population by over 100 million people and their population started to decline in 2015 according to Shanghai institute

I like how comments in this channel have a very negative view on China,yet they care so much about China. If you believe in your words,then you shouldn't care so much about China, fake everything anyway.

What's worse, their GDP relies on the US middle class consumption.

@@sui_wan and Europe. China's middle class is helping a bit but the don't have the money highly developed western and eastern nations do.

so how china become second largest market for tesla? how china become second largest market for apple? how china become the number one sales of mercedez??? are the financial reports of those companies also fake???

No seriously.💀 Even most of the B&R Initiative's international investment is in construction/infrastructure.

As opposed to the West not having competent infrastructure lmao

the fact that China can build 1 new city, 4,000 km of highways and 1,000 km of high-speed rail every year. all on time and on budget.making their infrastructure 40% cheaper than built in other countries.if China suddenly stops now they are afraid they will lose their ability (economy of scale) in building infrastructure

Public oversight on Infrastructure certainly is valid. But looking at the state of the USA and my home countries infrastructure, public oversight has culminated into "I want more road so I can drive my 8m wide discovery at 4km an hour.

And problem with Democracies - near zero investment into infrastructure as politicians fight each other rather than doing something good for the country

@@ephimp3189 Leaders only caring about themselves and not the country is also a problem (if not a bigger one) in autocracies.

China is so large and has so many people... that rather than build planned neighborhoods like in the US or most of the world.. China builds planned cities. It builds cities, then orders particular industries to move to that city and with the business comes their workers. This is how china solves the problems of slums, and overcrowding in its tier1 cities... and to keep the new city connected and viable, it has high speed rail. So travel time to the port is 1-2hours at most, even if its is 400-800km away.

100 million dollars for a 4 mile road in Las Vegas is considered "oversight" when it costs way less in other countries. But dEmOcRaCY 😂😂😂

"feds" is the wrong term given China is not federal, but unitary.

@@chinguunerdenebadrakh7022 Well, can't exactly call them "the units"

source: trust me bro

​@@yomanyo327 if you know history of china, decentralized (federal) was a hot mess in warlord era in 1920s, that's why many things centralized

@@piplupempoleon4225 Yes, because the things currently aren't a hot mess.

Not really, their debt per GDP is very small compared to the EU or the US

​@@markomak1 what? Their debt to gdp dwarfs the US. They just hide it better by keeping a lot of it in "companies" that are government entities but don't officially count as government debt. Or did you make the mistake of taking China's word at face value?

​@@markomak1 lmao no. China's total debt to GDP is approaching 300%.

@@mynameisschezuan at what point in time should they reach European levels with this tempo? Is it also the debt or the debt per gdp that you are talking about?

What would that be hilarious now? That's LITERALLY a common thing in China. Has been for decades. And it's not even just the government. Even the people have that attitude. They'll buy an apartment in a building with an elevator, and ride that elevator in the dark for years, because changing the lightbulb isn't their job..... They have that same attitude about fixing the frame and roof of the building as well.

Meanwhile The workers pay is reduced more and more.

Along with the money is a flow of goods, services, and resources. If sectors of the Chinese economy are underperforming, then that means that the flow is also substandard, rippling out across the other sectors, eventually reaching beyond their borders to foreign nations. The effects turn negatively political. In another way, debt is a negatice balance. If the value of goods or services generated by the debt are not worth more, then the country has to bring more money from with its state privilege, draining economic power from current reserves or printing money (raising inflation). No matter how the numbers are moved/altered, if there is collapsing flow, then some kind of resource is being cut.

Thats gonna kill consumption. Every yuan you print makes normal people poorer. Its a middle income trap waiting to happen

US is the master at printing money. No one prints money faster than US. China is still making more money than they spend while US is spending more money than they make. Everyone underestimated china and though they would collapse on its own. You might not agree with china, but we can't deny their achievements. They must be doing something right that we can learn.

@@bl5608 The only thing china does right is sell to US citizen rather than their own. Without that they'd be dirt poor because their citizen are dirt poor. And thats where their economy is going now that they wont be able to sell to americans anymore. The US will be fine because the fact is the only way to get rich fast is to sell things to western countries. Some country will replace chine but there is no one that can replace america. That why the US can keep printing. It prints because the world would be poor if not for it and the america workers and business would be richer.

Isn't the CCP causing inflation and keeping the Yuan low exactly in order for them to be competitive on the market?

Agree 👍🏻

Thats literally how the ccp stays in power and escapes critisims every time they screw something up they can blame it on local goverments Same in russia if something goes wrong the regional leaders/commanders get replaced but putin stays in power

@Jack Smith they had for thousands of years and xi ist basically the new emperor

@Jack Smith china doesn't have an actual emperor they have an dictator probably for life but the way he acts and control china is similar to an emperor which they had before thats why he called xi emperor You know what a metaphore is right?

​​​@Jack Smith He cannot be criticised in the country. He is an absolute ruler. What other title fits him other than Emperor? Perhaps more of a Roman Imperator rather than a Chinese Emperor ruling via the Mandate of Heaven, but still the same amount of power, wielded in the same way.

I'll never get tired of watching Holofans giving hot takes on China. Each clapback given reminds me of Kaichou.

Thats what I was thinking, what happends when there is not enough money to maintain all these bridges/highways?

You do know that China prints His own Money in Yuan? Look at their Inflation Dollar/Yuan Exchange IS allmost Same.

the fact that China can build 1 city, 4,000 km of highways and 1,000 km of high-speed rail every year. all on time and on budget.making their infrastructure 40% cheaper than built in other countries.if China suddenly stops now they are afraid they will lose their ability (economy of scale) in building infrastructure

@JackSmith-mk1ru I guess he means nature/the environment.

That is literally what the Belt and Road initiative is. No one says this buts it's primarily subsidizing for chinese construction companies, while putting other nation's in debt, gaining poltical capital, and owning key infrastructure of other nations.

That plan proved to be a little disappointing. China had to write down a lot of debt related to that.

That's literally what Belt and Road is. B&R is less of a 500 IQ master plan thought through 100 moves in advance genius and more of simple exporting of China's redundant construction capacity to the rest of the world. That's also why the west can never really match B&R because the west doesn't have massive redundant construction capacity and the vertically integrated construction chains (Chinese state companies do absolutely everything in a construction project, from making cement and steel and other basic materials all the way through to architectural and engineers specs of a project) that China has.

Not many people want to pay money for that service

The rapidly failing belt and road initiatives.

A lot of that debt has turned bad. China has had to restructure much of it, and more is looking likely.

It only works if the those countries can pay those debts. China made sure that the likelihood of those countries consistently repaying said debts was very low to enable political leverage in those countries.

​@Dr. Pennybags already happened, and welcome to the dystopia.

It's small potatoes compared to their own Debt trouble, and like others have mentioned, these investments have turned out real bad. Their all to 3rd world countries with no money but desperate for any kind of infrastructure. It's the only customers they could get.

Chine loans only have a 2-3% interest rate compared to Western lenders which charge 12-25% interest rate.

@Jack Smith you can't be that extensive and dry without having an accounting and micro & macro economics background. He reminds me of my professors. Anyone else who's more animated is fooling you.

@@CyFr bro he’s just a fed

Yeah issues is they dont get used do they, they might need them but the population really doesnt use them man.

@@firesideshats Maybe in other provinces they don't. But here it'd be impossible to get around without the bridges and tunnels

@@contentsdiffer5958 OK, I'm waiting...

Having family that lives in rural areas in China, I’d say that road and rail infanstructure isn’t too great of an investment. Rail investment is certainly much better, but even then there is a cap to the point where it’s functionally useless (300 km high speed rail, for example, while it is an experience unlike any other, should not be extended to rural villages.) Road infanstructure (particularly linking a small place to a bigger place) involves getting a motor vehicle and gas just as an upfront cost, which means it’s really not a good deal for most rural places because few, if any residents, will ever have the need to use it.

The value of infrastructure projects is usually measured by the externality effect they have. They were just using common short hand language. The problem with things such as much of the unprofitable parts of China's high-speed rail is that in addition to losing money as business entity, it provides very little benefit because few people are using it. It's money that could have been spent better elsewhere.

I thought I was the only one who noticed

Because they can lie and make up answer's

The problem is our not theirs! I come from earth

@@casper6014 China defaulting would absolutely obliterate the world economy, that's how. It's hilarious how people are actively wishing for that just because they don't like the country.

Exactly, at least one positive thing of the west is that we can admit when we're wrong

​@@casper6014 because he is chinese?

They used land to fund those projects, that's why they had lot of incentive to keep real estate as high as they can. But high price doesnt mean the market anymore. So you have these absurdly high price houses that nobody buys them..

You are not Chinese. No Chinese hate their country.

@Dr. Pennybags we'll all have to work till we die

Especially the youth in China losing confidence in the workforce.

Because the other kind is known to be more common. There were leaked Chinese/US diplomatic talks where China admitted as much.

How will you maintain too much infrastructure? It's gonna be a nightmare.

@@ChucksSEADnDEAD You can abandon some of it. It’s happened many times throughout history. Look at all the old rail lines the UK built during railway mania.

@@fernbedek6302 Right. So China wasted money and their infrastructure will crumble. So they'll have debt and weak infrastructure. Boy, they sure solved their problem.

so? i am dutch our government owns our land as well. in fact if we want to build a house we have to pay for the ground and the house. and the ground the house is build on we can never own even if we pay for it. it will remain property of the state. so there is literally no difference between the netherlands and china when it comes to this.

Because that is not how inflation works...

It's mostly held by Chinese state-owned banks.