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RE: LeoThread 2025-05-08 06:11

in LeoFinance5 months ago

Part 6/8:

The Burden of Hidden Debt

China's ongoing debt crisis—a staggering 303% of GDP—is not merely a function of corporate and household debt but is closely interconnected with local government finances. An estimated 17% of banks' total assets are tied up in loans to local governments, whose mounting debts exacerbate the risks facing the banking sector. The IMF indicates that these local government debts alone exceed 60 trillion yuan, further complicating the prospects for recovery.

The failure to adequately address these issues through meaningful economic reforms and enhanced market-driven practices has resulted in a bureaucratic banking environment unable to generate returns through profitable investments. This stagnation only serves to heighten the threat of systemic financial risks.