BEIJING -- Almost a third of local and regional governments in China could be in dire enough financial straits at the end of this year to require corrective action such as cutting spending, as growing interest burdens and shrinking income from land sales continue to batter budgets.
Under a rule set by China's State Council in 2016, local authorities whose interest burdens exceed 10% of their budgets must implement fiscal consolidation plans. S&P Global estimates that between 10% and 30% of China's roughly 300 prefecture-level administrative divisions will exceed this threshold at the end of 2022, up from fewer than 5% in 2020.
