China's Local Governments Face Squeeze From $2 Trillion in Debt

China's local governments face financial challenges due to their inability to tax, while being pressured to spend heavily, especially during the pandemic. This has led to a worsening fiscal position, exacerbated by the trade war. With a large amount of debt maturing soon, local governments are in a fiscal bind, needing to refinance debt and support economic growth.

What is the main problem faced by China's local governments in terms of finance?

• They are not required to spend much.

• They have surplus funds.

• They are forced to spend without the power to tax.

• They have too much power to tax.

How did the pandemic affect the financial situation of China's local governments?

• It worsened their fiscal position.

• It improved their fiscal position.

• It reduced their spending requirements.

• It had no impact on their finances.

What is the consequence of the mismatch between revenue and expenditure for local governments?

• Decreased need for infrastructure investment.

• Increased financial stability.

• Improved trade relations.

• Worsening fiscal position.

What financial challenge will China's local governments face next year?

• A reduction in spending needs.

• An increase in tax revenue.

• A large amount of maturing debt.

• A decrease in debt levels.

Why do local governments need to continue spending next year?

• To lower their debt levels.

• To support economic growth.

• To reduce economic growth.

• To decrease infrastructure investment.