Chinese Law Prof Blog

Editor: Donald C. Clarke
George Washington University Law School

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Thursday, July 14, 2011

China's local government debt problem

Reams and reams of stuff has been written on China's local government debt problem, and normally I stick pretty closely to law-related topics here. But this article, by Bloomberg's Henry Sanderson and Michael Forsythe (accompanied by this video, showing amazing athletic facilities and a stadium in Loudi, a city you've never heard of), is terrific and well worth reading.

As the article notes, the debt incurred by local government financing vehicles is typically collateralized by land. But there are all kinds of potential problems concealed in that simple phrase, "collateralized by". It might be more accurate to say that the debt purports to be so collateralized. Whether all the legal requirements for getting a security interest have been satisfied is not clear to me; I hope to do some more investigation and write further on this.

http://lawprofessors.typepad.com/china_law_prof_blog/2011/07/chinas-local-government-debt-problem.html

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