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Tuesday, April 24, 2012

Chongqing: Behind a Chinese City's Growth, Heavy Debt



The Chinese city of Chongqing accumulated tens of billions of dollars in liabilities during Bo Xilai's term as local Communist Party chief, as it juiced growth that helped launch the former high-flyer's campaign for a top political post.

A Wall Street Journal analysis of Chinese rating-company reports shows that 10 major investment vehicles the city used to fuel its growth accumulated more than 346 billion yuan ($54 billion) in liabilities, as it recapitalized banks and built highways, bridges and other projects that boosted growth and helped attract global companies looking for an entry into China's booming inland markets. In 2007, when Mr. Bo became Chongqing's party chief, its top post, those vehicles had total liabilities of 162 billion yuan.

Those debts likely represent only part of Chongqing's obligations, analysts say, because state-owned enterprises and property developers have liabilities of their own. The figures also exclude a number of smaller investment vehicles. Read More