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China’s version of Enron’s off-balance sheet partnerships are known as LGFVs (Local Government Financing Vehicles), originally used to finance sewers and streets, but don’t show up on any finance books. Basically, China is financing its economy the same way Enron financed its public success, with trillions of off-the-books dollars. Much of that went to finance infrastructure; e.g., roads, light rail, tourist attractions, that are no longer used or are sparsely used.
There are 2,900 LGFVs, and only a fifth of them have enough cash to cover their short term debt. Xi is blaming local officials. You can expect purges soon.
Audaces fortuna iuvat
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This has been this way since the Great Leap Forward. It’s one of the reasons why the great famine happened, because local officials were under such pressure to meet steel quotas and industrial targets. The imperial Chinese states also relied on local levies and taxation, but not to the current extent.
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