AS CHINESE officials admit,one of the biggest threats to the country’s financial stability is a reckless build-up of local-government debt. What they are less keen to confess is that local governments’ thuggish behaviour, such as grabbing land to sell to developers, and failing to supply the services expected of them,has become a cause of unrest.
One reason local governments in China are dysfunctional is the way their finances work (see article). They have very limited tax-raising powers of their own....
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Source: economist.com