China’s Bad Credit?

China's heavy burden of local-government debt is raising fears about the country's credit-worthiness.

The Associated Press reports that Fitch Ratings in Taiwan has cautioned about China's potential risk, given increasing local government debt burdens and an overall lack of transparency in China's debt dealings. The agency has said China's credit problems could worsen. Local governments in China have borrowed heavily in recent years to finance local infrastructure and other projects that promote economic growth on paper. In recent months, the central government has tried to curb lending, but heavy outstanding debt remains and concern is increasing about whether local governments will be able to repay their loans.