State and Local Government Debt Burdens
It is just a couple of years since local governments in China were officially allowed to issue debts, but some of them have quickly accumulated debt burdens that are alarmingly high. According to a recent report by Dow Jones Newswires, the Chinese island province of Hainan has a debt to gross domestic product (GDP) ratio of around 93%, yet the officials still consider the level "within a safe and controllable range."
For the interest of comparison, in my Tencent Weibo, a Twitter-like mini-blog in Chinese, I provided my Chinese readers some information about U.S. state and local government debt burdens, 1992-2011, with data compiled by the website usgovernmentspending.com. In 2011, the state with the highest debt/GDP ratio (for total state & local debts) is Massachusetts, with a ratio of 25%; for "all states combined," the ratio is about 17%. (See the attached graph for the top ten states.)
Two other common measures of debt burden are per capita debt and the ratio of debt to personal income. In 2011, per capita debt in Massachusetts is about $15,000, slightly lower than 30% of annual personal income; the national average of per capita debt is about $8,000, roughly 20% of annual personal income.
Despite recurring budget crises in recent years, U.S. state and local governments are more fiscally responsible than the U.S. federal government, and likely so than many Chinese local governments.