Dealing with Local Government Debt: Can China Learn from the Euro Crisis?

 

Time: November 25, 2024, 11:00-12:00 [CET]

location: Online on Zoom – Registration [In English]

 

China’s local governments are facing an escalating debt crisis, with some provinces, like Guizhou, reaching debt-to-GDP ratios as high as 150%—levels comparable to Greece during the European debt crisis. While China’s central government has implemented multifaceted debt management strategies, such as backing refinancing bonds and restructuring loans, it is constrained by the small staff of the Ministry of Finance, limited fiscal oversight, and a reluctance to offer direct fiscal support due to concerns over moral hazard. This event will explore how challenges with local government debt faced by China’s “Troika” comprising the Ministry of Finance, People’s Bank of China, and Financial Sector Regulator NAFRE mirrors the fiscal problems faced by Greece during the Eurozone crisis. How can China balance fiscal consolidation with the need to maintain local economic growth, especially when monetary policy is constrained and local governments have significant fiscal independence? Can Chinese provinces take on more debt than European countries without running into the same pitfalls? How should the Government communicate with the public to anchor expectations and mitigate adverse impacts on consumption and investment? Drawing lessons from the European Union’s and the IMF’s responses to Greece’s debt crisis, we will analyze the potential risks and solutions for China as it navigates its local debt crisis.

 

Program

The event consists of different impulse lectures followed by a discussion.

The Global China Conversation #36 will be held in English.

 

Literature

The impulse lectures refer to the following publications:

Kai, G., Schipke, A., (2024). China’s Local Governments and Greece: Lessons from the European Union and IMF Programmes. EAI COMMENTARY No. 81

 

Speakers

 

Alfred Schipke

 Alfred Schipke is a Professor of the Practice of International Finance at the Lee Kuan Yew School of Public Policy and serves as the Director of the East Asian Institute (EAI) at the National University of Singapore. His recent work emphasizes macroeconomic and financial sector issues, particularly focusing on China and India. In addition to his roles in Singapore, Professor Schipke is an Adjunct Professor at the National School of Development, Peking University, and regularly teaches international finance at the Harvard Kennedy School. He is a prolific author, contributing to several books and articles. Before his current appointments, he was the Director of the IMF–Singapore Regional Training Institute and held various senior positions at the IMF, where he provided strategic policy advice and led missions in Asia and the Pacific. His experience also includes negotiating IMF programs in Latin America.

 

 

 

Ludger Schuknecht

Ludger Schuknecht is Vice President and Corporate Secretary of the AIIB. He is responsible for AIIB’s relations with its Members, the Board of Governors, the Board of Directors, other aspects of governance including the admission of new Members and the integrity of the Bank’s governance.  Most recently, he was a Visiting Professor at the Lee Kuan Yew School of Public Policy, Singapore. Prior to this role, he was Deputy Secretary-General at the Organization for Economic Co-operation and Development (OECD) and was previously Chief Economist and Director General of Germany’s Federal Finance Ministry. Schuknecht has extensive experience working with international financial institutions, including the International Monetary Fund (IMF), the European Central Bank and the World Trade Organization.  He also acted as the Chief Negotiator for Germany in the founding of AIIB, making him one of the architects of AIIB and one of the drafters of its Articles of Agreement. He holds a Vordiplom in Economics from Ludwig Maximilian University of Munich, Germany; an MA in Economics from George Mason University, USA; and a Ph.D in Economics and a Habilitation in Economics from Universität Konstanz, Germany.

 

Moderator: Amelie Richter

Amelie Richter is a journalist and sinologist. At China.Table she focuses on relations between the European Union and the People’s Republic. Prior to China.Table, Richter worked for the German Press Agency in Australia, Mexico and Strasbourg. She currently lives in Paris.

 

Contact: Moritz Haase (moritz.haase@ifw-kiel.de)

 

Registration

Please register for this and following Global China Conversations here:

https://www.ifw-kiel.de/de/institut/veranstaltungen/global-china-conversations/anmeldung-zur-veranstaltungsreihe-global-china-conversations/