China's 10tn yuan debt support package aims to address local government debts, but experts argue it fails to tackle the hidden and accumulated nature of these debts.
The recent fiscal measures are deemed powerful by authorities, yet critics highlight they merely transfer debts onto balance sheets without genuinely resolving underlying issues.
Prof. Victor Shih points out that announcing 14.3tn yuan in hidden debt is misleading, estimating the real figure to be around 50tn yuan, showcasing the depth of the crisis.
After previous spending sprees on infrastructure, local governments face mounting debts and reduced revenues, leading to cutbacks in public sector wages and creating deflationary pressures.
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