China’s Local Deficit Could Be The Bigger Problem: SocGen

China Local Deficit  a bigger issue? Though China’s explicit government debt is only 16% of GDP, its local governments’ deficit was much bigger at 23.6% of GDP at the end of 2015, notes Societe Generale. Wei Yao and Claire Huang point out in their March 10 research note titled “The myth of China’s fiscal stimulus” that Chinese policymakers are increasingly turning to fiscal policy to support the economy through its difficult transition.

China Local Deficit  – China’s on-budget fiscal deficit never breached 3% of GDP

Yao and Huang point out that at first glance, one would presume that the Chinese government is in a very healthy fiscal position with the on-budget fiscal deficit never crossing the 3% GDP limit. However, the analysts...