Reuters logo
Fitch: Chinese Regions Show Wide Economic, Fiscal Disparities
August 29, 2017 / 11:58 AM / a month ago

Fitch: Chinese Regions Show Wide Economic, Fiscal Disparities

(The following statement was released by the rating agency) Link to Fitch Ratings' Report: China Local Government Blue Book here SHANGHAI, August 29 (Fitch) The coastal regions in China remain the strongest among 30 of the country's provinces, municipalities and autonomous regions, underpinned by their sizeable economies, fiscal revenue diversification and relatively low fiscal deficit to GDP ratios, a Fitch Ratings cross-dimensional analysis of the regions showed. The findings underscore the wide economic, fiscal, and demographic disparities across regions. The coastal regions led in GDP per capita in 2016, with Tianjin, Beijing and Shanghai ranked as the top three. Coal-rich Inner Mongolia and Shanxi also have relatively strong GDP per capita, while the south-western and north-western regions and Heilongjiang have GDP per capita that are below the national average. The coastal regions have the highest consumption-to-GDP ratios that were close to or above 40%, as well as the highest GDP contribution from tertiary industries. In comparison, Jilin, Inner Mongolia, and the north-western regions remained dependent on investments, which accounted for over 60% of their local GDP. China has set a fixed-asset investment (FAI) growth target of 9% in 2017, up from actual 7.9% (8.6% in real terms) in 2016. Local governments are more conservative, with only 10 out of the 27 regions that have disclosed 2017 FAI growth targets aiming for acceleration. South-western and inland regions, such as Guizhou, Yunnan, Jiangxi, Hunan and Henan, led FAI growth in 2016 and are likely to continue to do so in 2017 to address infrastructure inadequacy and stimulate economic growth. The 30 regions had a median fiscal deficit-to-GDP ratio of 13% in 2016. The coastal regions reported fiscal deficit-to-GDP ratios that were well below the median, while the north-western and south-western regions have high fiscal deficits relative to GDP. Chinese local governments generate a median of around 40% of fiscal revenue from real estate. Chongqing and Hainan ranked in the top two, with more than half of their fiscal revenue sourced from real estate in 2015. Tianjin had the lowest percentage of fiscal revenue from real estate among all municipalities, with Beijing and Shanghai tracking around the median level. Most provincial governments do not publicly disclose their indirect debt levels, that is, category two and three debt, which makes it difficult to assess their debt levels. Chinese local governments had an aggregate direct debt of CNY15.3 trillion (including CNY10.6 trillion of municipal bonds) at end-2016, representing 89% of the direct debt ceiling imposed by the Ministry of Finance, or 20.6% of GDP, down from 92% and 21.4% respectively at end-2015. Jiangsu, Shandong and Zhejiang were the three largest onshore local-government bond issuers in 2016. Liaoning, Guizhou, and Guangdong rank top three in terms of their planned municipal bond issuance under the debt swap programme in 2017-2019. The report covered 30 of the 31 mainland Chinese provinces, municipalities and autonomous regions; Tibet is excluded due to its small economic scale and lack of data. The full report, "Chinese Local Governments Blue Book - A Cross-Dimensional Analysis", is the latest in a series of Fitch China Research Initiative publications dedicated to providing comprehensive, in-depth research and insight into the key credit aspects of sectors in China. The full report is available at www.fitchratings.com or by clicking on the link in this media release. Contact: Karl Shen Associate Director +86 21 5097 3008 Fitch Ratings (Beijing) Ltd. Shanghai Branch 3401, 34/F, Shanghai Tower, No.479, Lujiazuihuan Road, Pudong Shanghai 200120, China Shuncheng Zhang Associate Director +86 21 5097 3039 Jenny Huang Director +86 21 5097 3101 Ying Wang Senior Director +86 21 5097 3010 Terry Gao Senior Director +852 2263 9972 Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: wailun.wan@fitchratings.com. Additional information is available on www.fitchratings.com ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below