According to a statement published by the official Changjiang Daily newspaper on Friday, Wuhan City’s finance bureau announced that a total of 259 companies owed it more than 100 million yuan ($14 million) combined, leading it to declare bankruptcy.
Wuhan, the largest city in central China, has publicly demanded that hundreds of local companies repay their debts, in an extremely rare move that highlights the dire financial situation facing many of the country’s municipal governments amid economic uncertainty.
The city’s finance bureau said in a Friday statement published by the official Changjiang Daily newspaper that a total of 259 companies and entities owed it more than 100 million yuan ($14 million) combined. It urged them to pay their overdue debts as soon as possible.
The debtors or guarantors include state or privately owned companies, government departments and think tanks, according to official media outlets quoting a screenshot of the newspaper.
The finance bureau said it was unsuccessful in collecting the debts and was offering rewards to anyone able to provide useful information about the debtors’ financial assets.
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The public appeal by Wuhan, which was at the epicenter of the Covid-19 pandemic that began in late 2019, is highly unusual and underscores the fiscal challenges facing China’s local governments.
Chinese leader Xi Jinping’s zero-Covid campaign has exhausted the budgets of many cities and provinces, after they spent billions of dollars on frequent Covid lockdowns, mass testing and quarantine centers before last December’s policy U-turn. A real estate crash has exacerbated the problem, as local governments rely heavily on land sale revenues.
Analysts estimate China’s outstanding government debts surpassed 123 trillion yuan ($18 trillion) last year, of which nearly $10 trillion is so-called “hidden debt” owed by risky local government financing platforms.
According to Bloomberg, an unnamed banker at First Republic earned more than J.P. Morgan CEO Jamie Dimon last year.