Part 3/7:
The Local Government Debt Crisis
A pivotal concern is the staggering amount of local government debt, which, according to Goldman Sachs, is estimated to be around $23 trillion—surpassing China’s total economic output. This debt has grown at an annual rate of 16%, substantially outpacing overall economic growth rates. Alarmingly, around 90% of state-owned enterprises are trapped in a debt cycle where they borrow to service existing debts, illustrating a deeply unsustainable financial ecosystem.