Will local government debt derail decades of China’s economic growth? Much of China’s remarkable growth has been fueled by local government issued debt that funded the massive infrastructure overhaul throughout the country. Local governments successfully relied on land finance and issued bonds to borrow and grow. But now, with the dramatic economic slowdown, is the merry-go-round seizing up? Difficult headwinds such as the Global Financial Crisis, the real estate sector collapse, the cooling of foreign investment interest, an unfavorable geopolitical environment and continuing COVID lockdowns, all beg the question: Do local governments have enough cash, and/or assets to cover their ballooning debt payments?

In her talk, Professor Oi will examine and explain the history China’s local government debt problem and outline why local government financing vehicles (LGFVs) now face serious systemic liquidity risk. What are the tools the Chinese government can deploy to manage this situation in a way that maintains stability? And what are the risks inherent in these approaches?

Jean C. Oi is the William Haas Professor of Chinese Politics in the Department of Political Science and a Senior Fellow of the Freeman Spogli Institute for International Studies (FSI) at Stanford University. She directs the China Program at the Walter H. Shorenstein Asia-Pacific Research Center at FSI and is the founding Lee Shau Kee Director of the Stanford Center at Peking University. She received her PhD in political science from the University of Michigan.

Dr. Oi has published extensively on political economy and the process of reform in China. Recent books include "Fateful Decisions: Choices that will Shape China's Future," co-edited with Tom Fingar (2020); "Zouping Revisited: Adaptive Governance in a Chinese County," co-edited with Steven Goldstein (2018); and "Challenges in the Process of China's Urbanization," co-edited with Karen Eggleston and Yiming Wang (2017). Recent articles include “Firms as Revenue Safety Net: Political Connections and Returns to the Chinese State,” with Chaohua Han and Xiaojun Li, "China Quarterly," forthcoming. “China’s Local Government Debt: The Grand Bargain,” with Adam Liu and Yi Zhang, "The China Journal," volume 87, number 1, January 2022. “China’s Challenges: Now it Gets Much Harder,” co-authored with Thomas Finger, "The Washington Quarterly," Vol. 43 (Spring 2020.

Her current research continues to explore central-local relations, including local government debt and fiscal politics broadly defined. She is beginning a project on China’s Belt and Road Initiative.


Zoom registration link: https://umich.zoom.us/webinar/register/WN_EvTxvuTfTHW07E5wnkpR1w

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