China’s cities are on the verge of a debt crisis

From severalgdplgfv kilometres away China 117 Tower, the world’s sixth-tallest skyscraper, is an extraordinary sight—rivalling anything Dubai, Hong Kong or New York has to offer. On closer inspection, however, the building in Tianjin is revealed to be an eyesore of epic proportions. Construction on “117”, as locals call it, was never completed. Large sections remain unfinished; patches of the tower’s concrete skeleton are exposed to the outside world. Instead of becoming a magnet for business and wealth, it has been for years. Other derelict towers surround the building, forming a graveyard of a central business district. Local officials would hide the entire area if they could.Tales of extravagantly wasteful spending have circulated in China for years, as cities and provinces accumulated debts to and boost the country’s . These debts have reached extraordinary levels—and the bill is now arriving. Borrowing often sits in local-government-financing vehicles (s), firms set up by officials to dodge rules which restrict their ability to borrow. These entities’ outstanding bonds reached 13.6trn yuan ($2trn), or about 40% of China’s corporate-bond market, at the end of last year. Lending through opaque, unofficial channels means that, in reality, debts are considerably higher. An estimate in 2020 suggested a figure of nearly 50trn yuan.