China’s broadest audit of local government debt in two years showed borrowing swelled to 17.9 trillion yuan (US$2.95 trillion) as of June, underscoring financial risks in the world’s second-biggest economy.
The number for total liabilities, released in a statement on the National Audit Office Web site yesterday, rose about 67 percent from a previous estimate of 10.7 trillion yuan at the end of 2010.
China’s lending spree in recent years has evoked comparisons to debt surges that tipped Asian nations into crisis in the late 1990s and preceded Japan’s lost decades. The audit will help Communist Party leaders to judge risks in the financial system as they roll out economic-policy reforms decided at a meeting in Beijing last month.
“It is a very sizable build up and it’s the kind of build up that is not sustainable,” said Louis Kuijs, chief China economist at Royal Bank of Scotland Group PLC in Hong Kong, who previously worked at the World Bank. “It’s expanding at much too rapid a rate.”
The 17.9 trillion yuan total includes 4.3 trillion yuan of “contingent” liabilities, where local governments wouldn’t legally be obliged to make repayments, the audit office said.
“China’s government debt risks are under control in general, but there are potential risks at some places,” the office said.
Regional governments set up more than 10,000 local financing units to fund construction projects after they were barred from directly issuing bonds under a 1994 budget law. The State Council in July ordered a nationwide review of local-government debt.
Former finance minister Xiang Huaicheng (項懷誠) said in April the amount may be more than 20 trillion yuan and Nomura Holdings Inc in September estimated 19 trillion yuan as of the end of last year. Lou Jiwei (樓繼偉), the current finance minister, in September called the scale of local-government debt controllable and said the risk of default was “not great.”
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to