Naughton: Local governments in China shouting 'Hey, wait a minute!'
Bloomberg quotes Barry Naughton on Chinese economy
07/21/2010
Kevin Hamlin,
Bloomberg
Three dozen cranes tower over the Tianjin West Railway Station, part of a 501-billion yuan ($74- billion) government-funded building boom in this city of 9.8 million southeast of Beijing.
Like hundreds of other local Chinese projects, Tianjin’s construction is financed in part by land sales that are dropping as China’s real-estate slump takes hold. Property sales slid at an annual 8 percent rate in June. Selling land produced 41 percent of Tianjin’s income last year, according to China Index Academy, a Beijing real-estate research firm.
A cascading collapse in local finances could force the central government to shore up banks that lent to local government entities, said Jim Walker, chief economist at Hong Kong-based Asianomics Ltd., in a June 7 interview. Banks could “easily” be saddled with bad loans of more than $400 billion over the next two years, he said.
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Professor Naughton is an authority on the Chinese economy, with an emphasis on issues relating to industry, trade, finance, and China's transition to a market economy. Recent research focuses on regional economic growth in the People's Republic of China and the relationship between foreign trade and investment and regional growth. He is also completing a general textbook on the Chinese economy. Recently completed projects have focused on Chinese trade and technology, in particular, the relationship between the development of the electronics industry in China, Taiwan and Hong Kong, and the growth of trade and investment among those economies.
