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.
Comments
Now these are sad news :(
Posted by: CG | December 27, 2011 12:10 PM
thank you for the post, yes this is not a good one
Posted by: cfd | January 18, 2012 3:29 AM
Makes my tummy ache seeing this type of news. I can only hope that things get better and we can cut out our excessive spending and really put our money where we need it.
Posted by: Short sales process | February 27, 2012 5:24 PM
Debts make us suffer. However, without any debts we are unable to get what we want.
Posted by: debt negotiation | March 23, 2012 8:38 AM
The news are definitely not very promising and hearing about debts is making me think of the situation many European countries fell into, such as Greece. And I am hoping that we will be more wise and will reduce our expenses.
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