Key Takeaways
- Growth remains divergent across different provinces in China. Local and regional governments (LRGs) with weaker economic fundamentals and greater reliance on transfers could face more uncertainties in sustaining growth or improving income.
- We expect provinces to manage their fiscal performance better than lower-tier LRGs during this economic slowdown.
- The growth of direct debt in LRGs would also diverge; highly leveraged ones will be further constrained in their access to additional debt.
Economic growth rates in China have slowed across board. Provinces inland, however, continued to grow faster than the national average in 2019--an indication of their stronger growth potential. In recent years, China has taken steps to alleviate poverty, revitalize rural areas, and coordinate regional developments. Those activities are the growth engine for the less developed central and western areas. Nonetheless, the economic scales and income levels in those areas are still much lower than the provinces in the east. GDP per capita for Chinese provinces range widely--from 0.5x to 2.9x of the national average.
S&P Global Ratings believes GDP per capita can broadly reflect the ability of a local and regional government (LRG) to generate revenue. Operating and capital revenues usually form a larger proportion of total revenue for LRGs in the higher income bracket, given they have a broader tax base and land-related revenues. For China LRGs in the lower income bracket, central government transfers are usually the dominant revenue source.
In our view, LRGs with stronger economic fundamentals and less-stretched finances have more room to sustain higher capital expenditure during economic downcycles. For instance, China's overall investment growth slowed down steadily over the past few years, but that growth remained much stronger in Guangdong, Zhejiang, and Shenzhen. These LRGs are more self-sufficient in terms of revenue generation, and hence have a greater capacity to drive growth through investments.
In 2019, pressure increased further for China LRGs' budgetary performance. We estimate the deficit after capital accounts (i..e., after considering operating activities and investment activities) for the sector widened to 14% in 2019 from 11% in 2018. Due to slower economic growth and nationwide tax cut measures, the LRG sector's adjusted total revenue rose only 7% in 2019, slowing down from 12% in 2018. Spending pressure, on the other hand, remained elevated. Operating and capital expenditures for the sector together rose by 10% in 2019.
Nonetheless, provincial LRGs' budgetary deficits only widened moderately by 1.2 percentage points to 5.3% in 2019. This is because capital expenditure is largely undertaken at the city and county levels. On the other hand, some provincial LRGs increased transfer payments to support the lower-tier governments, leading to wider deficits on the provincial level.
We believe provincial operating balances will further weaken this year, after some provincial LRGs' adjusted operating balances turned negative compared with total revenue in 2019. China's Ministry of Finance forecasts a lower general budget revenue this year while the room to cut expenditures is limited.
Along with widening deficits, outstanding direct debt for the LRG sector increased by 15% to reach Chinese renminbi (RMB) 21.3 trillion in 2019, the fastest pace since 2016. The strong growth stemmed mainly from special purpose bonds, which increased 27% in 2019. Excluding bonds lent to the lower-tier governments, tier-one LRG's direct debt ratio is still contained at only 28% of the adjusted operating revenue as of 2019.
We believe China's central government takes into consideration different factors when assigning direct debt quota to the local governments. At the same time, the central government maintains a fair control over debt growth in the longer term. An implicit measure Chinese authorities typically use to gauge an LRG's debt burden is the ratio of direct debt to adjusted total revenue. In our view, the chance of an LRG receiving much higher direct debt quota should be limited if the ratio comes in very high, while the sector average was at 84% for 2019.
"China's Provincial Governments Risk Indicators" contains comparative statistics for China's tier-one LRGs to assess their individual credit profile. We often use the term "tier-one LRGs" interchangeably with the provincial governments to refer to the first tier of local governments in mainland China. Other examples of tier-one governments include autonomous regions, municipal governments, and cities under state planning. These LRGs have direct fiscal ties with the central government.
S&P Global Ratings assesses the creditworthiness of non-U.S. LRGs by combining its assessment of their institutional framework and individual credit profiles to arrive at the anchor, a core element for assigning an issuer credit rating. As such, we focus on the issuer-specific credit profile. For Chinese tier-one LRGs, we focus on assessing "provincial level" credit factors, while using "whole province" ones as supplementary.
The tables include economic measures, fiscal conditions, and debt indicators across Chinese tier-one LRGs. The debt indicators include our estimates of these governments' tax-supported debt burden, including off-budget debt.
Table 1
| Local and Regional Government Economic Profiles | ||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Tier-one LRGs | GDP per capita | GDP scale | Real GDP growth (%) | Investment growth (%) | ||||||||||||||||||||||||||
| US$, 2019* | RMB | Rank | Bil. US$, 2019* | Bil. RMB, 2019§ | Rank | 2016 | 2017 | 2018 | 2019 | 2016 | 2017 | 2018 | 2019 | |||||||||||||||||
| Anhui | 8,480 | 58,496 | 18 | 538 | 3,711 | 11 | 8.7 | 8.5 | 8.0 | 7.5 | 11.7 | 11.0 | 11.8 | 9.0 | ||||||||||||||||
| Beijing | 23,773 | 164,000 | 2 | 513 | 3,537 | 12 | 6.8 | 6.7 | 6.6 | 6.1 | 5.9 | 5.3 | (5.5) | (2.4) | ||||||||||||||||
| Chongqing | 10,992 | 75,828 | 14 | 342 | 2,361 | 18 | 10.7 | 9.3 | 6.0 | 6.3 | 12.1 | 9.5 | 7.0 | 5.7 | ||||||||||||||||
| Dalian† | 14,499 | 100,024 | 10 | 101 | 700 | 31 | 6.5 | 7.1 | 6.5 | 6.5 | (68.5) | 15.1 | 10.1 | (19.8) | ||||||||||||||||
| Fujian‡ | 15,531 | 107,139 | 9 | 615 | 4,240 | 8 | 8.4 | 8.1 | 8.3 | 7.6 | 9.3 | 13.9 | 11.5 | 5.9 | ||||||||||||||||
| Gansu | 4,783 | 32,995 | 36 | 126 | 872 | 30 | 7.6 | 3.6 | 6.1 | 6.2 | 10.5 | (40.3) | (3.9) | 6.6 | ||||||||||||||||
| Guangdong‡ | 13,651 | 94,172 | 11 | 1,561 | 10,767 | 1 | 7.5 | 7.5 | 6.8 | 6.2 | 10.0 | 13.5 | 10.7 | 11.1 | ||||||||||||||||
| Guangxi | 6,228 | 42,964 | 34 | 308 | 2,124 | 20 | 7.3 | 7.1 | 6.8 | 6.0 | 12.8 | 12.8 | 10.8 | 9.5 | ||||||||||||||||
| Guizhou | 6,731 | 46,433 | 30 | 243 | 1,677 | 23 | 10.5 | 10.2 | 9.1 | 8.3 | 21.1 | 20.1 | 15.8 | 1.0 | ||||||||||||||||
| Hainan | 8,191 | 56,507 | 21 | 77 | 531 | 33 | 7.5 | 7.0 | 5.8 | 5.8 | 11.7 | 10.1 | (12.5) | (9.2) | ||||||||||||||||
| Hebei | 6,719 | 46,348 | 31 | 509 | 3,510 | 13 | 6.8 | 6.6 | 6.5 | 6.8 | 8.4 | 5.3 | 6.0 | 6.1 | ||||||||||||||||
| Heilongjiang | 5,245 | 36,183 | 35 | 197 | 1,361 | 25 | 6.1 | 6.4 | 4.5 | 4.2 | 5.5 | 6.2 | (4.7) | 6.3 | ||||||||||||||||
| Henan | 8,174 | 56,388 | 22 | 787 | 5,426 | 5 | 8.1 | 7.8 | 7.6 | 7.0 | 13.7 | 10.4 | 8.1 | 8.0 | ||||||||||||||||
| Hubei | 11,218 | 77,387 | 13 | 664 | 4,583 | 7 | 8.1 | 7.8 | 7.8 | 7.5 | 13.1 | 11.0 | 11.0 | 10.7 | ||||||||||||||||
| Hunan | 8,341 | 57,540 | 19 | 576 | 3,975 | 9 | 8.0 | 8.0 | 7.8 | 7.6 | 13.8 | 13.1 | 10.0 | 10.1 | ||||||||||||||||
| Inner Mongolia | 9,836 | 67,852 | 16 | 250 | 1,721 | 21 | 7.2 | 4.0 | 5.2 | 5.2 | 10.1 | (7.2) | (28.3) | 6.8 | ||||||||||||||||
| Jiangsu | 17,918 | 123,607 | 7 | 1,444 | 9,963 | 2 | 7.8 | 7.2 | 6.7 | 6.1 | 7.5 | 7.5 | 5.5 | 5.1 | ||||||||||||||||
| Jiangxi | 7,707 | 53,164 | 26 | 359 | 2,476 | 17 | 9.0 | 8.8 | 8.7 | 8.0 | 14.0 | 12.3 | 11.1 | 9.2 | ||||||||||||||||
| Jilin | 6,318 | 43,582 | 33 | 170 | 1,173 | 29 | 6.9 | 5.3 | 4.4 | 3.0 | 10.1 | 1.4 | 1.6 | (16.3) | ||||||||||||||||
| Liaoning‡ | 8,290 | 57,191 | 20 | 361 | 2,491 | 16 | -2.5 | 4.2 | 5.6 | 5.5 | (63.5) | 0.1 | 3.7 | 0.5 | ||||||||||||||||
| Ningbo† | 20,752 | 143,157 | 4 | 174 | 1,199 | 27 | 7.1 | 7.8 | 7.0 | 6.8 | 10.1 | 3.5 | 3.6 | 7.7 | ||||||||||||||||
| Ningxia | 7,822 | 53,961 | 24 | 54 | 375 | 34 | 8.1 | 7.8 | 6.8 | 6.5 | 8.2 | 3.0 | (18.2) | (10.3) | ||||||||||||||||
| Qingdao† | 18,016 | 124,282 | 6 | 170 | 1,174 | 28 | 7.9 | 7.5 | 7.4 | 6.5 | 13.7 | 7.4 | 7.9 | 21.6 | ||||||||||||||||
| Qinghai | 7,100 | 48,981 | 27 | 43 | 297 | 35 | 8.0 | 7.3 | 7.2 | 6.3 | 9.9 | 10.5 | 7.3 | 5.0 | ||||||||||||||||
| Shaanxi | 9,661 | 66,649 | 17 | 374 | 2,579 | 15 | 7.6 | 8.0 | 8.3 | 6.0 | 12.3 | 14.6 | 10.4 | 2.5 | ||||||||||||||||
| Shandong‡ | 10,242 | 70,653 | 15 | 1,030 | 7,107 | 3 | 7.6 | 7.4 | 6.4 | 5.5 | 10.5 | 7.3 | 4.1 | (8.4) | ||||||||||||||||
| Shanghai | 22,802 | 157,300 | 3 | 553 | 3,816 | 10 | 6.9 | 6.9 | 6.8 | 6.0 | 6.3 | 7.2 | 5.2 | 5.1 | ||||||||||||||||
| Shanxi | 6,628 | 45,724 | 32 | 247 | 1,703 | 22 | 4.5 | 7.1 | 6.6 | 6.2 | 0.8 | 6.3 | 5.7 | 8.4 | ||||||||||||||||
| Shenzhen† | 29,498 | 203,489 | 1 | 390 | 2,693 | 14 | 9.0 | 8.8 | 7.6 | 6.7 | 23.6 | 23.8 | 20.6 | 18.8 | ||||||||||||||||
| Sichuan | 8,085 | 55,774 | 23 | 676 | 4,662 | 6 | 7.8 | 8.1 | 8.0 | 7.5 | 13.1 | 10.6 | 10.2 | 8.6 | ||||||||||||||||
| Tianjin | 13,091 | 90,306 | 12 | 204 | 1,410 | 24 | 9.1 | 3.6 | 3.6 | 4.8 | 8.0 | 0.5 | (5.6) | 13.9 | ||||||||||||||||
| Tibet | 7,089 | 48,902 | 28 | 25 | 170 | 36 | 10.1 | 10.0 | 8.9 | 8.1 | 23.2 | 23.8 | 9.8 | (2.1) | ||||||||||||||||
| Xiamen† | 20,691 | 142,739 | 5 | 87 | 600 | 32 | 7.9 | 7.6 | 7.7 | 7.9 | 14.4 | 10.3 | 10.1 | 8.6 | ||||||||||||||||
| Xinjiang | 7,812 | 53,888 | 25 | 197 | 1,360 | 26 | 7.6 | 7.6 | 6.1 | 6.2 | (5.1) | 20.0 | (25.2) | 2.5 | ||||||||||||||||
| Yunnan | 6,950 | 47,944 | 29 | 337 | 2,322 | 19 | 8.7 | 9.5 | 8.9 | 8.1 | 19.8 | 18.0 | 11.6 | 8.5 | ||||||||||||||||
| Zhejiang‡ | 15,601 | 107,624 | 8 | 904 | 6,235 | 4 | 7.6 | 7.8 | 7.1 | 6.8 | 10.9 | 8.6 | 7.1 | 10.1 | ||||||||||||||||
| China | 10,276 | 70,892 | 14,363 | 99,087 | 6.8 | 6.9 | 6.7 | 6.1 | 8.1 | 7.2 | 5.9 | 5.4 | ||||||||||||||||||
| *USD/RMB: 6.8985 for 2019. RMB--Chinese renminbi. | ||||||||||||||||||||||||||||||
| §2018 GDP data is based on latest disclosures, as of Jan. 22, 2019. | ||||||||||||||||||||||||||||||
| § 2019 GDP Per capita is based on public data, except for Tianjin, Jilin, Ningxia, Xinjiang and Dalian, which were calculated by dividing 2019 GDP by population. | ||||||||||||||||||||||||||||||
| † Cities under state planning: Shenzhen, Ningbo, Xiamen, Qingdao, Dalian. | ||||||||||||||||||||||||||||||
| ‡ Economic data of these provinces include that of the respective cities under state planning. | ||||||||||||||||||||||||||||||
| Note: Due to the lack of full-year data, Ningbo and Xiamen's investment growth rates for 2019 were based on FAI growth during first 11 months of the year. | ||||||||||||||||||||||||||||||
| Source: Local governments' Bureau of Statistics, Wind, S&P Global Ratings. | ||||||||||||||||||||||||||||||
Table 2
| Local and Regional Government Fiscal Profiles (Provincial Level) | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Tier-1 LRGs | Total Revenue 2019 (Bil. RMB)* | Revenue Composition (2019)(%) | Operating Balance as % of Operating Revenue† | Balance After Capital Accounts as % of Total Revenue ‡ | ||||||||||||||
| General Government | Government Funds | Transfers§ | 2015-2019 Average | 2019 | 2015-2019 Average | 2019 | ||||||||||||
| Anhui | 388 | 7.4 | 0.7 | 91.9 | 3.4 | 0.3 | (1.8) | (4.9) | ||||||||||
| Beijing | 612 | 54.4 | 14.9 | 30.6 | 16.9 | 16.5 | (3.8) | 0.8 | ||||||||||
| Chongqing | 408 | 18.9 | 27.5 | 53.6 | 12.6 | 8.2 | (4.4) | (7.3) | ||||||||||
| Dalian† | 74 | 39.1 | 16.6 | 44.2 | 13.9 | N.A. | (6.1) | N.A. | ||||||||||
| Fujian‡ | 184 | 14.4 | 1.5 | 84.1 | 8.2 | N.A. | (1.3) | N.A. | ||||||||||
| Gansu | 313 | 7.6 | 3.0 | 89.4 | 6.1 | 8.8 | (5.9) | (5.0) | ||||||||||
| Guangdong‡ | 602 | 54.6 | 1.3 | 44.1 | 5.9 | 1.1 | (0.3) | (2.3) | ||||||||||
| Guangxi | 364 | 10.5 | 1.0 | 88.5 | 2.5 | 0.4 | (5.4) | (9.7) | ||||||||||
| Guizhou | 340 | 10.0 | 1.4 | 88.5 | 13.2 | N.A. | (1.3) | N.A. | ||||||||||
| Hainan | 139 | 20.9 | 3.7 | 75.4 | 8.6 | 6.7 | (4.4) | (6.0) | ||||||||||
| Hebei | 450 | 16.8 | 5.3 | 77.9 | 2.5 | 1.9 | (3.0) | (3.2) | ||||||||||
| Heilongjiang | 356 | 8.4 | 1.2 | 90.4 | 6.9 | 4.8 | (2.7) | (3.4) | ||||||||||
| Henan | 568 | 3.4 | 5.1 | 91.5 | 0.7 | 0.4 | (2.8) | (3.3) | ||||||||||
| Hubei | 445 | 3.2 | 3.7 | 93.1 | 0.5 | (0.7) | (2.6) | (3.8) | ||||||||||
| Hunan | 454 | 11.4 | 3.6 | 84.9 | (1.5) | (2.1) | (5.0) | (4.6) | ||||||||||
| Inner Mongolia | 343 | 18.4 | 1.8 | 79.8 | 9.6 | 10.6 | (2.7) | (3.0) | ||||||||||
| Jiangsu | 458 | 4.1 | 2.4 | 93.4 | 7.7 | 1.9 | (0.9) | (5.8) | ||||||||||
| Jiangxi | 310 | 9.4 | 3.7 | 87.0 | 2.9 | 3.5 | (6.5) | (8.5) | ||||||||||
| Jilin | 270 | 11.1 | 0.8 | 88.1 | 3.9 | 1.6 | (6.3) | (7.7) | ||||||||||
| Liaoning‡ | 304 | 3.8 | 0.6 | 95.6 | 4.8 | 3.1 | (1.0) | (0.9) | ||||||||||
| Ningbo† | 88 | 28.9 | 32.8 | 38.3 | 13.2 | 18.5 | (5.5) | (1.3) | ||||||||||
| Ningxia | 111 | 15.6 | 2.8 | 81.6 | 7.4 | 3.9 | (7.7) | (10.8) | ||||||||||
| Qingdao† | 105 | 5.0 | 24.5 | 70.4 | 22.1 | 13.4 | (10.1) | (9.3) | ||||||||||
| Qinghai | 148 | 6.0 | 2.0 | 92.0 | 1.8 | 1.0 | (15.4) | (17.0) | ||||||||||
| Shaanxi | 367 | 17.2 | 7.3 | 75.5 | 3.9 | 2.6 | (6.1) | (5.7) | ||||||||||
| Shandong‡ | 396 | 5.9 | 2.2 | 91.9 | 3.8 | (1.0) | (6.5) | (10.1) | ||||||||||
| Shanghai | 522 | 65.1 | 12.8 | 22.1 | 18.9 | 13.8 | (0.7) | (3.4) | ||||||||||
| Shanxi | 276 | 25.7 | 1.8 | 72.5 | 7.1 | 6.2 | (5.5) | (5.2) | ||||||||||
| Shenzhen† | 387 | 61.1 | 25.3 | 13.6 | 21.2 | 19.9 | (7.5) | (5.2) | ||||||||||
| Sichuan | 671 | 12.1 | 0.8 | 87.0 | 2.5 | 0.7 | (1.2) | (2.8) | ||||||||||
| Tianjin | 209 | 54.6 | 20.1 | 25.3 | 16.6 | 7.3 | (9.7) | (21.7) | ||||||||||
| Tibet | 195 | 1.5 | 0.3 | 98.2 | 26.6 | 15.5 | (1.6) | 0.9 | ||||||||||
| Xiamen† | 96 | 55.6 | 25.6 | 18.8 | 19.7 | 14.0 | (6.5) | (9.3) | ||||||||||
| Xinjiang | 371 | 4.4 | 2.6 | 93.0 | 9.5 | 8.1 | (2.8) | (2.2) | ||||||||||
| Yunnan | 481 | 7.7 | 2.2 | 90.1 | 4.1 | 1.4 | (5.1) | (5.8) | ||||||||||
| Zhejiang‡ | 321 | 10.7 | 1.1 | 88.2 | 1.3 | 1.4 | (6.6) | (8.1) | ||||||||||
| China LRG Sector | 12,170 | 20.0 | 6.1 | 73.9 | 7.3 | 4.7 | (3.6) | (5.3) | ||||||||||
| *Total Revenue: sum of adjusted operating revenue, and adjusted capital revenue. Operating Revenue: own operating revenue plus transfers inflow under general government account. Capital Revenue: own capital revenue plus transfers inflow under government fund account. §Transfers: transfers inflow under both general government account and government fund account. †Operating balance: adjusted operating revenue minus adjusted operating expenditure. Operating expenditure: own operating expenditure, adjusted down by capital items, plus transfers outflow under general government account. ‡Balance after capital account: operating balance plus capital account balance. Capital account balance: adjusted capital revenue minus adjusted capital expenditure. Adjusted capital expenditure: own capital expenditure, adjusted up by capital items, plus transfers outflow under government fund account. Numbers do not include respective cities under state planning. | ||||||||||||||||||
| LRG--Local and regional government. RMB--Chinese renminbi. N.A.--Not available. | ||||||||||||||||||
| Note: 2019 fiscal performance figures are based on 2019 preliminary budgetary reports and are subject to revisions. Detailed budget numbers for Dalian, Fujian and Guizhou in 2019 are not fully available to derive budgetary performance metrices according to S&P's definitions. Hence 2018 final figures are presented for the three provinces for revenue composition. 2015 - 2018 averages are used to calculate operating balance and balance after capital accounts. | ||||||||||||||||||
| Source: Ministry of Finance, local governments' fiscal reports and finance yearbooks, S&P Global Ratings. | ||||||||||||||||||
Table 3
| Local and Regional Government Fiscal Profile (Whole Province Basis) | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Tier-1 LRGs | Total revenue 2019 (bil. RMB)* | Revenue composition (2019)(%) | Operating balance as % of operating revenue† | Balance after capital accounts as % of total revenue†† | ||||||||||||||
| General government | Government funds | Transfers§ | 2015-2019 Average | 2019 | 2015-2019 average | 2019 | ||||||||||||
| Anhui | 996 | 31.9 | 33.9 | 34.2 | 27.9 | 22.0 | (16.6) | (16.6) | ||||||||||
| Beijing | 915 | 63.6 | 24.2 | 12.2 | 25.7 | 26.7 | (9.1) | (10.8) | ||||||||||
| Chongqing | 634 | 33.7 | 35.5 | 30.9 | 26.6 | 18.1 | (7.9) | (11.1) | ||||||||||
| Dalian† | 105 | 66.8 | 17.4 | 15.8 | 15.2 | N.A. | (15.8) | N.A. | ||||||||||
| Fujian‡ | 567 | 39.7 | 38.6 | 21.7 | 20.1 | N.A. | (12.0) | N.A. | ||||||||||
| Gansu | 407 | 20.9 | 12.8 | 66.3 | 27.4 | 29.0 | (12.5) | (17.1) | ||||||||||
| Guangdong‡ | 1,568 | 56.6 | 32.7 | 10.6 | 13.0 | 4.2 | (10.8) | (15.6) | ||||||||||
| Guangxi | 665 | 27.3 | 25.6 | 47.2 | 21.2 | 19.3 | (10.0) | (13.3) | ||||||||||
| Guizhou | 599 | 28.8 | 20.9 | 50.3 | 27.9 | N.A. | (2.8) | N.A. | ||||||||||
| Hainan | 219 | 37.2 | 20.8 | 42.0 | 29.4 | 29.1 | (9.1) | (13.4) | ||||||||||
| Hebei | 1,051 | 35.6 | 31.7 | 32.7 | 18.9 | 14.7 | (11.3) | (16.3) | ||||||||||
| Heilongjiang | 476 | 26.5 | 7.9 | 65.5 | 31.7 | 27.3 | (10.8) | (17.8) | ||||||||||
| Henan | 1,284 | 31.5 | 31.8 | 36.8 | 23.5 | 16.1 | (6.6) | (11.8) | ||||||||||
| Hubei | 1,035 | 32.7 | 33.6 | 33.7 | 21.3 | 16.7 | (10.5) | (16.8) | ||||||||||
| Hunan | 975 | 30.9 | 30.7 | 38.4 | 21.5 | 16.0 | (9.1) | (13.0) | ||||||||||
| Inner Mongolia | 543 | 37.9 | 11.7 | 50.3 | 35.5 | 34.3 | (6.7) | (11.4) | ||||||||||
| Jiangsu | 2,029 | 43.4 | 45.6 | 11.0 | 23.8 | 16.8 | (8.0) | (12.7) | ||||||||||
| Jiangxi | 766 | 32.5 | 33.1 | 34.4 | 20.4 | 14.4 | (10.6) | (17.4) | ||||||||||
| Jilin | 409 | 27.3 | 16.3 | 56.4 | 25.9 | 23.1 | (13.9) | (20.0) | ||||||||||
| Liaoning‡ | 542 | 35.1 | 19.2 | 45.7 | 20.5 | 15.4 | (3.1) | (7.5) | ||||||||||
| Ningbo† | 241 | 59.7 | 34.7 | 5.7 | 23.0 | 21.7 | (6.2) | (13.2) | ||||||||||
| Ningxia | 144 | 29.4 | 8.2 | 62.4 | 34.6 | 31.4 | (12.7) | (19.5) | ||||||||||
| Qingdao† | 270 | 46.0 | 44.6 | 9.4 | 27.2 | 20.2 | (8.0) | (9.6) | ||||||||||
| Qinghai | 180 | 15.9 | 8.2 | 75.9 | 29.6 | 29.7 | (16.6) | (19.3) | ||||||||||
| Shaanxi | 682 | 33.6 | 27.3 | 39.2 | 24.0 | 19.5 | (9.1) | (13.0) | ||||||||||
| Shandong‡ | 1,360 | 38.9 | 40.7 | 20.4 | 20.2 | 12.2 | (9.3) | (14.4) | ||||||||||
| Shanghai | 1,051 | 68.2 | 23.0 | 8.8 | 34.5 | 30.6 | (4.4) | (5.1) | ||||||||||
| Shanxi | 548 | 42.9 | 21.7 | 35.5 | 23.6 | 25.5 | (11.5) | (13.0) | ||||||||||
| Shenzhen† | 514 | 73.4 | 19.1 | 7.5 | 21.1 | 20.5 | (9.9) | (13.9) | ||||||||||
| Sichuan | 1,112 | 36.3 | 27.5 | 36.2 | 23.1 | 17.7 | (8.3) | (14.2) | ||||||||||
| Tianjin | 437 | 55.2 | 32.7 | 12.1 | 26.3 | 17.2 | (15.6) | (32.4) | ||||||||||
| Tibet | 221 | 10.0 | 3.4 | 86.5 | 40.7 | 42.2 | (0.4) | (2.5) | ||||||||||
| Xiamen† | 126 | 60.9 | 31.7 | 7.4 | 26.9 | 16.8 | (3.3) | (10.9) | ||||||||||
| Xinjiang | 548 | 28.8 | 9.6 | 61.6 | 27.7 | 26.2 | (10.3) | (20.5) | ||||||||||
| Yunnan | 615 | 34.0 | 8.5 | 57.5 | 23.5 | 21.2 | (12.0) | (17.9) | ||||||||||
| Zhejiang‡ | 1,394 | 37.4 | 55.5 | 7.0 | 12.6 | N.A. | (9.4) | N.A. | ||||||||||
| China LRG Sector | 25,716 | 39.3 | 30.4 | 29.6 | 24.1 | 20.5 | (9.2) | (13.6) | ||||||||||
| Note: Detailed budget numbers for Dalian, Fujian and Guizhou and Zhejiang in 2019 are not fully available to derive budgetary performance matrices according to S&P Global Ratings' definitions. Hence we present 2018 figures for them in this table. | ||||||||||||||||||
| LRG--Local and regional government. RMB--Chinese renminbi. N.A.—Not available. Source: Ministry of Finance, local governments' fiscal reports and finance yearbooks, S&P Global Ratings. | ||||||||||||||||||
Table 4
| Local and Regional Governments' Direct Debt Profile | ||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Provincial Level Basis | Whole Province Basis | |||||||||||||||||||||
| Tier-1 LRGs | 2019 direct debt* (bil. RMB) | 2019 direct debt excluding onlending† (bil. RMB) | Direct debt % to operating revenue | Direct debt excluding onlending % to operating revenue | Direct debt % to operating revenue | 2019 direct debt % to total revenue†† | 2019 direct debt/GDP* | |||||||||||||||
| 2015-2019 average | 2019 | 2015-2019 average | 2019 | 2015-2019 Average | 2019 | |||||||||||||||||
| Anhui | 794 | 51 | 187.5 | 208.0 | 11.4 | 13.5 | N.A. | 121.1 | 79.6 | 21.4 | ||||||||||||
| Beijing | 496 | 137 | 106.3 | 100.6 | 42.9 | 27.8 | 73.7 | 71.6 | 54.2 | 14.0 | ||||||||||||
| Chongqing | 560 | 177 | 163.5 | 196.8 | 48.8 | 62.1 | 110.3 | 139.5 | 88.4 | 23.7 | ||||||||||||
| Dalian† | 198 | 59 | 339.4 | N.A. | 97.8 | N.A. | 246.4 | N.A. | N.A. | 28.2 | ||||||||||||
| Fujian‡ | 624 | 13 | 285.0 | N.A. | 5.8 | N.A. | 148.5 | N.A. | N.A. | 14.7 | ||||||||||||
| Gansu | 311 | 106 | 84.5 | 103.0 | 28.0 | 35.2 | 70.5 | 88.1 | 76.5 | 35.7 | ||||||||||||
| Guangdong‡ | 1,153 | 124 | 191.6 | 195.6 | 18.4 | 21.0 | 100.2 | 109.8 | 73.5 | 10.7 | ||||||||||||
| Guangxi | 635 | 163 | 165.9 | 180.8 | 36.9 | 46.3 | 117.5 | 129.6 | 95.6 | 29.9 | ||||||||||||
| Guizhou | 967 | 150 | 290.3 | N.A. | 25.1 | N.A. | 205.9 | N.A. | N.A. | 57.7 | ||||||||||||
| Hainan | 223 | 51 | 180.9 | 168.1 | 36.0 | 38.6 | 130.1 | 129.7 | 101.8 | 42.0 | ||||||||||||
| Hebei | 875 | 79 | 180.2 | 206.8 | 15.6 | 18.5 | 107.4 | 122.4 | 83.3 | 24.9 | ||||||||||||
| Heilongjiang | 475 | 57 | 98.5 | 135.7 | 12.4 | 16.2 | 78.7 | 108.8 | 99.7 | 34.9 | ||||||||||||
| Henan | 791 | 120 | 133.4 | 147.8 | 15.9 | 22.3 | 80.8 | 90.6 | 61.6 | 14.6 | ||||||||||||
| Hubei | 804 | 36 | 168.5 | 190.2 | 7.0 | 8.6 | 95.9 | 118.1 | 77.7 | 17.5 | ||||||||||||
| Hunan | 1,017 | 187 | 203.4 | 235.4 | 38.5 | 43.3 | 129.1 | 151.9 | 104.4 | 25.6 | ||||||||||||
| Inner Mongolia | 731 | 60 | 212.8 | 222.7 | 12.5 | 18.3 | 142.2 | 155.4 | 134.6 | 42.4 | ||||||||||||
| Jiangsu | 1,488 | 52 | 324.9 | 335.6 | 13.4 | 11.8 | 121.6 | 135.3 | 73.3 | 14.9 | ||||||||||||
| Jiangxi | 535 | 71 | 170.3 | 181.5 | 19.6 | 24.1 | 96.0 | 105.0 | 69.9 | 21.6 | ||||||||||||
| Jilin | 434 | 21 | 139.5 | 162.9 | 6.9 | 7.8 | 103.9 | 127.4 | 106.3 | 37.1 | ||||||||||||
| Liaoning‡ | 691 | 27 | 259.0 | 230.2 | 9.0 | 9.0 | 165.6 | 158.2 | 127.4 | 27.7 | ||||||||||||
| Ningbo† | 192 | 86 | 310.7 | 354.1 | 125.4 | 159.2 | 118.8 | 122.4 | 79.7 | 16.0 | ||||||||||||
| Ningxia | 165 | 52 | 136.7 | 155.0 | 31.5 | 48.3 | 107.1 | 126.0 | 114.9 | 44.1 | ||||||||||||
| Qingdao† | 158 | 75 | 171.9 | 205.4 | 92.9 | 97.2 | 84.2 | 106.2 | 58.6 | 13.5 | ||||||||||||
| Qinghai | 210 | 137 | 128.1 | 145.8 | 83.6 | 95.1 | 111.4 | 128.3 | 117.0 | 70.9 | ||||||||||||
| Shaanxi | 653 | 127 | 184.8 | 193.9 | 28.5 | 37.6 | 124.2 | 132.6 | 95.8 | 25.3 | ||||||||||||
| Shandong‡ | 1,155 | 112 | 289.7 | 303.0 | 22.6 | 29.4 | 128.6 | 144.3 | 84.9 | 16.2 | ||||||||||||
| Shanghai | 572 | 85 | 121.2 | 126.4 | 24.4 | 18.9 | 67.9 | 71.0 | 54.5 | 15.0 | ||||||||||||
| Shanxi | 355 | 64 | 112.5 | 131.7 | 19.7 | 23.6 | 73.2 | 83.0 | 64.8 | 20.8 | ||||||||||||
| Shenzhen† | 43 | 13 | 7.6 | 14.9 | 4.3 | 4.3 | 5.3 | 10.4 | 8.4 | 1.6 | ||||||||||||
| Sichuan | 1,075 | 75 | 161.4 | 163.9 | 10.1 | 11.5 | 111.5 | 134.1 | 96.7 | 23.1 | ||||||||||||
| Tianjin | 496 | 174 | 237.9 | 297.8 | 92.6 | 104.7 | 121.2 | 169.0 | 113.5 | 35.2 | ||||||||||||
| Tibet | 16 | 5 | 12.7 | 8.0 | 4.0 | 2.7 | 5.8 | 7.3 | 7.0 | 9.1 | ||||||||||||
| Xiamen† | 79 | 61 | 88.4 | 115.4 | 68.1 | 89.6 | 70.7 | 91.9 | 62.5 | 13.1 | ||||||||||||
| Xinjiang | 463 | 112 | 114.4 | 130.0 | 28.8 | 31.5 | 82.1 | 94.5 | 84.5 | 34.0 | ||||||||||||
| Yunnan | 797 | 207 | 186.4 | 170.2 | 43.3 | 44.3 | 140.1 | 142.4 | 129.5 | 34.3 | ||||||||||||
| Zhejiang‡ | 1,039 | 57 | 314.5 | 331.6 | 11.2 | 18.3 | 143.4 | N.A. | N.A. | 16.7 | ||||||||||||
| China LRG Sector | 21,307 | 3,183 | 176.8 | 189.1 | 24.9 | 28.2 | 108.2 | 121.0 | 83.5 | 21.5 | ||||||||||||
| *Direct Debt: outstanding debt explicitly under LRG legal name. †Direct Debt Excluding Onlending: LRG direct debt after deducting on-lent debt to lower tier governments. | ||||||||||||||||||||||
| ††Sum of adjusted operating revenue, and adjusted capital revenue for the whole province. | ||||||||||||||||||||||
| ‡Numbers do not include respective cities under state planning. | ||||||||||||||||||||||
| Note: Detailed budget numbers for Dalian, Fujian and Guizhou and Zhejiang in 2019 are not fully available to derive budgetary performance matrices according to S&P Global Ratings' definitions. Detailed whole province budget numbers for Anhui are not fully available to derive operating revenue in 2015 – 2018. | ||||||||||||||||||||||
| LRG--Local and regional government. RMB--Chinese renminbi. N.A.—Not available. Source: Ministry of Finance, local governments' fiscal reports and finance yearbooks, S&P Global Ratings. | ||||||||||||||||||||||
Table 5
| Local and Regional Government Tax-Supported Debt Profile (Provincial Level Basis) | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Tier-1 LRGs | Non-financial institution SOE debt (bil. RMB)* | Off-budget debt (bil. RMB)† | Tax-supported debt as % to consolidated operating revenues†† | Tax-supported debt excluding on-lending as % to consolidated operating revenues†† | Tax-supported debt excluding on-lending as % to LRG's operating revenues | |||||||
| Anhui | 539 | - | 191.7 | 12.5 | 12.5 | |||||||
| Beijing | 2,187 | 616 | 167.4 | 124.8 | 159.1 | |||||||
| Chongqing | 469 | 363 | 230.1 | 139.7 | 178.7 | |||||||
| Dalian† | 25 | 13 | 345.8 | 118.9 | 119.4 | |||||||
| Fujian‡ | 424 | 220 | 389.4 | 117.7 | 128.5 | |||||||
| Gansu | 453 | 382 | 92.9 | 68.7 | 164.2 | |||||||
| Guangdong‡ | 619 | 115 | 202.9 | 39.4 | 39.7 | |||||||
| Guangxi | 786 | 579 | 212.7 | 132.1 | 216.0 | |||||||
| Guizhou | 406 | 343 | 316.8 | 116.7 | 134.1 | |||||||
| Hainan | 63 | 8 | 164.0 | 40.9 | 41.2 | |||||||
| Hebei | 728 | 251 | 151.1 | 49.8 | 80.4 | |||||||
| Heilongjiang | 19 | 19 | 112.5 | 18.9 | 20.4 | |||||||
| Henan | 809 | 276 | 175.9 | 68.9 | 73.9 | |||||||
| Hubei | 485 | 443 | 233.5 | 100.3 | 120.5 | |||||||
| Hunan | 438 | 298 | 274.1 | 109.8 | 113.5 | |||||||
| Inner Mongolia | 156 | 61 | 221.5 | 33.8 | 34.4 | |||||||
| Jiangsu | 337 | - | 351.5 | 14.0 | 14.0 | |||||||
| Jiangxi | 335 | 178 | 214.5 | 78.9 | 86.4 | |||||||
| Jilin | 147 | - | 145.2 | 7.0 | 7.0 | |||||||
| Liaoning‡ | 207 | 33 | 232.6 | 19.5 | 20.2 | |||||||
| Ningbo† | 170 | 136 | 614.0 | 400.2 | 379.6 | |||||||
| Ningxia | 69 | 44 | 172.1 | 78.8 | 80.7 | |||||||
| Qingdao† | 233 | 197 | 361.8 | 294.6 | 361.4 | |||||||
| Qinghai | 185 | 104 | 163.1 | 126.6 | 165.6 | |||||||
| Shaanxi | 968 | 421 | 266.2 | 138.2 | 164.0 | |||||||
| Shandong‡ | 1,452 | 409 | 331.0 | 116.3 | 141.6 | |||||||
| Shanghai | 967 | 145 | 137.5 | 45.8 | 49.0 | |||||||
| Shanxi | 1,512 | 438 | 217.6 | 145.0 | 186.9 | |||||||
| Shenzhen† | 457 | 90 | 37.0 | 35.2 | 37.3 | |||||||
| Sichuan | 693 | 618 | 197.7 | 86.4 | 116.3 | |||||||
| Tianjin | 857 | 661 | 496.7 | 378.4 | 575.4 | |||||||
| Tibet | 23 | 20 | 62.4 | 45.7 | 47.1 | |||||||
| Xiamen† | 252 | - | 92.9 | 73.6 | 74.0 | |||||||
| Xinjiang | 267 | 74 | 132.7 | 49.4 | 54.9 | |||||||
| Yunnan | 842 | 682 | 190.7 | 119.4 | 213.1 | |||||||
| Zhejiang‡ | 424 | 23 | 312.2 | 20.3 | 22.2 | |||||||
| China LRG Sector | 19,003 | 8,259 | 208.8 | 85.8 | 105.7 | |||||||
| All numbers are for 2018. *Non-financial institution SOE debt: Debt of local government-owned non-financial institution enterprises with outstanding onshore bond, per Wind. | ||||||||||||
| †Off-budget debt: Debt of local government-owned enterprises with outstanding onshore bond, whose debt repayment S&P Global Ratings deems as supported by LRG fiscal revenue. | ||||||||||||
| ††Tax-supported debt: LRG direct debt and off-budget debt. Tax-supported debt excluding on-lending: LRG direct debt excluding onlending and off-budget debt. Consolidated operating revenues: LRG's adjusted operating revenues, plus operating revenue generated by referenced local government-owned enterprises. | ||||||||||||
| ‡Numbers do not include respective cities under state planning. | ||||||||||||
| Note: Provincial and whole-province SOE debts were revised for Guangdong from the Risk Indicator Report published in March 2020. We have now excluded one of the SOEs from tax supported debt, because it is a financial institution by definition | ||||||||||||
| LRG--Local and regional government. SOE--State-owned enterprise. RMB--Chinese renminbi. Source: Ministry of Finance, local governments' fiscal reports and finance yearbooks, Wind, S&P Global Ratings. | ||||||||||||
Table 6
| Local and Regional Government Tax-Supported Debt Profile (Whole Province Basis) | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Tier-1 LRGs | Non-financial institution SOE debt (bil. RMB)* | Off-budget debt (bil. RMB)† | Tax-supported debt as % to consolidated operating revenues†† | Tax-supported debt as % to LRG's adjusted operating revenues†† | Non-financial institution SOE debt as % of GDP | Tax-supported debt as % GDP | ||||||||
| Anhui | 1,407 | 566 | 174.0 | 201.6 | 41.4 | 36.3 | ||||||||
| Beijing | 2,854 | 1,106 | 138.4 | 225.3 | 86.2 | 46.2 | ||||||||
| Chongqing | 1,376 | 1,124 | 266.8 | 391.1 | 67.6 | 78.2 | ||||||||
| Dalian† | 76 | 56 | 268.3 | 292.6 | 9.9 | 33.2 | ||||||||
| Fujian‡ | 804 | 488 | 236.3 | 297.0 | 20.8 | 26.6 | ||||||||
| Gansu | 595 | 519 | 103.4 | 227.7 | 72.1 | 93.2 | ||||||||
| Guangdong‡ | 1,710 | 628 | 131.9 | 162.9 | 17.1 | 16.2 | ||||||||
| Guangxi | 1,107 | 849 | 202.3 | 308.1 | 56.4 | 71.3 | ||||||||
| Guizhou | 1,201 | 959 | 297.6 | 392.7 | 81.1 | 124.5 | ||||||||
| Hainan | 66 | 11 | 128.9 | 129.8 | 13.6 | 42.5 | ||||||||
| Hebei | 960 | 441 | 122.5 | 174.1 | 26.6 | 32.5 | ||||||||
| Heilongjiang | 183 | 176 | 121.1 | 134.8 | 14.2 | 45.7 | ||||||||
| Henan | 1,305 | 601 | 132.3 | 155.6 | 26.1 | 25.1 | ||||||||
| Hubei | 1,638 | 1,409 | 243.7 | 321.7 | 39.0 | 49.4 | ||||||||
| Hunan | 1,566 | 1,262 | 266.0 | 335.7 | 43.1 | 58.7 | ||||||||
| Inner Mongolia | 315 | 184 | 176.2 | 187.2 | 19.5 | 52.0 | ||||||||
| Jiangsu | 5,186 | 4,146 | 330.9 | 525.9 | 55.6 | 58.7 | ||||||||
| Jiangxi | 1,068 | 727 | 207.2 | 249.2 | 47.0 | 53.0 | ||||||||
| Jilin | 367 | 181 | 154.3 | 164.1 | 32.7 | 49.1 | ||||||||
| Liaoning‡ | 328 | 109 | 171.9 | 182.9 | 14.0 | 32.8 | ||||||||
| Ningbo† | 342 | 299 | 267.2 | 315.6 | 31.8 | 44.6 | ||||||||
| Ningxia | 86 | 61 | 149.2 | 154.3 | 24.6 | 56.9 | ||||||||
| Qingdao† | 356 | 308 | 236.6 | 298.0 | 32.6 | 39.8 | ||||||||
| Qinghai | 236 | 146 | 165.9 | 214.3 | 85.9 | 117.3 | ||||||||
| Shaanxi | 1,598 | 886 | 245.0 | 312.5 | 66.8 | 61.6 | ||||||||
| Shandong‡ | 2,286 | 750 | 174.1 | 223.8 | 34.3 | 26.5 | ||||||||
| Shanghai | 1,198 | 240 | 88.1 | 93.4 | 33.3 | 20.6 | ||||||||
| Shanxi | 1,649 | 547 | 163.7 | 206.0 | 98.1 | 50.2 | ||||||||
| Shenzhen† | 457 | 90 | 25.9 | 27.0 | 18.9 | 4.3 | ||||||||
| Sichuan | 1,976 | 1,534 | 197.2 | 282.3 | 46.0 | 57.4 | ||||||||
| Tianjin | 1,563 | 1,228 | 405.8 | 615.8 | 117.0 | 122.4 | ||||||||
| Tibet | 40 | 20 | 17.3 | 17.4 | 25.8 | 21.8 | ||||||||
| Xiamen† | 289 | 34 | 103.7 | 116.3 | 52.9 | 17.9 | ||||||||
| Xinjiang | 722 | 414 | 155.9 | 178.4 | 59.2 | 66.6 | ||||||||
| Yunnan | 1,088 | 826 | 177.4 | 294.3 | 52.1 | 73.8 | ||||||||
| Zhejiang‡ | 2,409 | 1,548 | 297.2 | 400.6 | 41.5 | 42.2 | ||||||||
| China LRG Sector | 40,407 | 24,474 | 196.5 | 256.2 | 44.0 | 46.7 | ||||||||
| All numbers are for 2018. Note: Provincial and whole-province SOE debts were revised for Guangdong from the Risk Indicator Report published in March 2020. We have now excluded one of the SOEs from tax-supported debt, because it is a financial institution by definition. | ||||||||||||||
| LRG--Local and regional government. SOE--State-owned enterprise. RMB--Chinese renminbi. Source: Ministry of Finance, local governments' fiscal reports and finance yearbooks, Wind, S&P Global Ratings. | ||||||||||||||
Related Criteria And Research
Related Criteria
Related Research
- China's Local-Government Deficits Could Rise To 25% On NPC Targets, May 26, 2020
- Chinese Tier-One Local Governments Risk Indicators, March 19, 2020
- Not All China's Tier-One Local Governments Are Equal, March 19, 2020
- Pandemic Upends Finances Of China's Weak Local Governments, March 17, 2020
- Public Finance System Overview: Chinese Provincial Governments , Feb. 12, 2020
Wenyin Huang, Alex Lam, Sandy Ng, Yunbang Xu, Congyun Zhou and Yutong Zou also contributed to the report.
This report does not constitute a rating action.
| Primary Credit Analyst: | Lulu Jiang, Hong Kong (852) 2532-8087; lulu.jiang@spglobal.com |
| Secondary Contact: | Susan Chu, Hong Kong (852) 2912-3055; susan.chu@spglobal.com |
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