Beijing extends and pretends to deal with its mountain of local government debt

As the pooh-bahs of the Chinese Communist Party gathered recently to extol their vision for urban modernization, China’s paramount leader Xi Jinping offered an assessment of recent developments that appeared slightly at odds with the upbeat tone of the proceedings. The president said that “(I)n the past, GDP was used to judge heroes,” but “One beautiful thing covered a hundred ugly things. Nowadays, in many matters, one ugliness covers a hundred beautiful things.”

Yet as China’s cities, counties, and provinces confront slower economic growth and fiscal belt-tightening, the leadership didn’t mention the “one ugliness” that is weighing on local governments—trillions of dollars of debt. That is because the Chinese government already has declared victory over local government debt and see