Connect with us

Business

China’s Cities Are Buried in Debt, but They Keep Shoveling It On

Published

on

China’s Cities Are Buried in Debt, but They Keep Shoveling It On

In 2015, when Shangqiu, a municipality in central China concerning the dimension of Kentucky, laid out a plan for the subsequent twenty years, it positioned itself as a transportation hub with a sprawling community of railways, highways and river transport routes.

By the tip of 2020, Shangqiu had constructed 114 miles of high-speed rail, and at the moment a number of nationwide railways make stops within the metropolis. By 2025, Shangqiu expects the protection of its freeway community to have elevated by 87 p.c. The town is constructing its first two airports, three new highways and sufficient parking area for 20,000 further slots.

The infrastructure splurge is way from over. On Feb. 23, the Shangqiu Communist Social gathering secretary reiterated town’s imaginative and prescient as a logistics energy when celebrating a brand new partnership with a state-owned funding agency, which might assist Shangqiu borrow cash for much more initiatives.

That morning, town’s bus operator introduced that it must droop providers due to monetary difficulties. The pandemic had hit it exhausting, the corporate stated, and the Shangqiu authorities hadn’t offered subsidies that it had promised. Because of this, the corporate had not paid its staff for months — it couldn’t even afford to cost its electrical buses. A number of hours after posting its announcement, the corporate deleted it, after it had made nationwide headlines and the Shangqiu authorities had intervened.

China is filled with Shangqius nowadays. As a part of the ruling Communist Social gathering’s all-in push for financial progress this yr, native governments already in debt from borrowing to pay for enormous infrastructure are taking over further debt. They’re constructing extra roads, railways and industrial parks regardless that the financial returns on that exercise are more and more meager. Of their wrestle to seek out the cash to fund their new initiatives, and the curiosity funds on their outdated ones, cities are chopping public providers and advantages.

Advertisement

Shangqiu is one in every of greater than 20 cities and cities in China the place bus providers have been shut down or put in peril as a result of native governments had failed to supply the required working funds. Wuhan and different cities minimize medical insurance. Nonetheless others slashed the pay of presidency staff. Many native governments in Hebei Province, which borders Beijing, didn’t pay heating subsidies for pure gasoline throughout the winter, leaving residents to shiver throughout a record-setting chilly wave.

For practically three many years, China’s native governments have been the envy of the world. They appeared to have limitless assets to binge-build airports, roads and industrial parks, lots of which have been funded by promoting land.

Now, lots of them are in fiscal disarray. Within the nation’s single-minded pursuit of its “zero Covid” coverage, native governments exhausted their coffers to adjust to strict testing, quarantine and lockdown guidelines. Struggling companies are paying much less in taxes. After blow upon blow of presidency crackdowns, property builders are reluctant to purchase land.

“Governments don’t have cash to spend on primary providers if land gross sales don’t recuperate dramatically,” stated Victor Shih, an affiliate professor of political science on the College of California, San Diego. “Native authorities, particularly in third- and fourth-tier cities, will nonetheless discover it troublesome to satisfy lots of its budgetary obligations.”

In accordance with official information, China’s 31 provincial governments owed round $5.1 trillion on the finish of 2022, a rise of 66 p.c from three years earlier. An Worldwide Financial Fund report places the quantity at $9.5 trillion, equal to half the nation’s economic system.

Advertisement

However from the enthusiastic manner that the cities have embraced funding — China’s outdated playbook for financial progress — it’s exhausting to inform that they’re deeply in debt.

State media is filled with breathless stories about new initiatives. Guangdong, China’s largest province by financial output, introduced that it might make investments $1.2 trillion in 1,530 initiatives in 2023. Henan, the province that features Shangqiu, stated it might spend $261 billion on 2,500 initiatives.

The issue is that these governments don’t have the cash.

In China, the place the federal government owns nearly all of the land, the primary supply of revenue for a lot of localities has for years come from leasing or promoting property to builders. However income from land gross sales fell by greater than one-fifth final yr, in response to the finance ministry. All 31 Chinese language provincial governments ran deficits due to “zero Covid.” Two-thirds of the native authorities entities that borrow cash exceeded unofficial debt thresholds set by Beijing, with their excellent debt having surpassed 120 p.c of their revenue by December, in response to S&P World.

In Shangqiu, the federal government didn’t specify how it might fund its 701 initiatives for 2023. It did say that final yr its income from land gross sales was half what town had focused, and that it had spent $1 billion on debt service. Put one other manner: Shangqiu used greater than a 3rd of its tax income to pay curiosity on its debt. This yr, officers are placing their hope in an enormous bounce in land gross sales and a few progress in tax income.

Advertisement

However Shangqiu is just not planning to spend the cash on public providers. Quite the opposite, town plans to chop spending on schooling, well being care, employment safety, transportation and plenty of different public providers, in response to price range paperwork on its web site.

“We must always shield and enhance the general public’s livelihood based mostly on our financial progress and monetary well being,” the paperwork stated.

China is filled with wasteful infrastructure that the federal government likes to brag about however that doesn’t serve essentially the most pressing wants of the general public.

The Chinese language authorities likes to say the nation has the longest and quickest high-speed railways on the planet. However apart from a few traces that join the megacities of Beijing, Shanghai, Guangzhou and Shenzhen, most traces function beneath capability and at an ideal loss. About 80 p.c of China’s high-speed railways constructed prior to now decade have been inbuilt distant and poor areas, China State Railway Group stated final yr.

Zhao Jian, a professor at Beijing Jiaotong College, warned in an article that high-speed railways might turn into the “grey rhino” that crushed the Chinese language economic system as a result of many native governments had taken on loads of debt to construct them. However most of these railways transfer individuals, not freight. So they’d make sense solely in densely populated areas the place individuals have been prepared to pay extra for pace.

Advertisement

Native leaders are concerned about infrastructure initiatives as a result of their financial payoff, whereas minimal, is fast — individuals get building jobs, and firms get constructing contracts. Such a short-term strategy dominates in China’s political system, through which cadres are deployed to run towards the objective set by their chief whatever the monetary or human price.

The Shangqiu authorities brags that there’s about 150 sq. ft of inexperienced area for every of the two.3 million residents within the metropolis’s central municipal space. One in every of Shangqiu’s largest infrastructure initiatives this yr is a wetlands park. After constructing many roads to nowhere, native governments have been spending large on city beautification initiatives in recent times.

It’s good to have inexperienced area for everybody. However like most inland Chinese language cities, Shangqiu isn’t rich. Its school graduates are complaining on social media that it’s troublesome to discover a job that pays greater than $300 a month. Its primary pension offers its seniors with $17.80 a month, after a $1.50 elevate this yr.

Many Chinese language people who find themselves no less than 60 years outdated dwell on pensions like this. In accordance with official information, in 2021, $54 billion in primary pensions was distributed to greater than 162 million individuals, or about $28 an individual every month on common. The residents would most likely choose that the federal government spent on unemployment safety, bus service and welfare as a substitute of high-speed railways and inexperienced area.

Shangqiu is way from an exception.

Advertisement

A resident in Pucheng, within the northwestern province of Shaanxi, complained on the native authorities’s on-line messaging board in February that there was no bus service between downtown and the railway station.

“That is essentially the most primary public service,” the resident, who signed with the title Li Hongbo, wrote. “I felt that individuals’s livelihood has deteriorated. I hope the leaders pays some consideration to it.”

Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Business

As job growth in California falls back, unemployment rate remains highest in the country

Published

on

As job growth in California falls back, unemployment rate remains highest in the country

California posted another month of anemic job growth in April, keeping the state’s unemployment rate the highest in the country, 5.3%, the government reported Friday.

Statewide, employers added a net of just 5,200 jobs in April, down from 18,200 in March, according to California’s Employment Development Department.

Nationwide, employers added 175,000 jobs in April and 315,000 in March. The U.S. unemployment rate in April was 3.9%.

Major sectors of California’s economy — including manufacturing, information and professional and business services — showed job losses last month, and job opportunities aren’t as plentiful as before, even as the number of unemployed workers in the state has risen by 164,000 over the last 12 months.

In California, there were 140 unemployed workers for every 100 job openings in March, according to federal statistics released Friday. Less than two years ago, there were about two openings for every jobless person.

Advertisement

Carol Jackson, an unemployed worker in South Los Angeles, says she has been pounding the pavement for months, hoping to make use of her recently minted associate degree in web management and database administration. But despite sending her resume to at least 100 employers, she has not had a single interview.

“I can tell you that California is pretty brutal now,” said Jackson, 57.

Hiring in California has been lagging behind national trends, with one notable exception. The state’s healthcare and social assistance sector added 10,100 jobs last month, bringing the gains over the last 12 months to about 155,000. That’s 75% of all new jobs added since April 2023.

Hospitals and doctors’ offices have been bulking up, but the fastest growth has been at outpatient centers, home healthcare firms, nursing facilities and, especially, social assistance, which includes vocational rehabilitation and child day-care services.

“Healthcare is the big gorilla in the room; it dominates everything,” said Mark Schniepp, director of the California Economic Forecast in Santa Barbara, adding that it’s likely to keep growing robustly with new and expanded medical facilities across the state.

Advertisement

Leisure and hospitality businesses added 3,100 jobs last month. The gains included employment at hotels and restaurants — despite the added stress employers are feeling from a minimum wage increase to $20 an hour for fast-food workers that went into effect April 1.

While there are fears of layoffs as the food industry adopts technology to replace workers, California’s restaurants are getting a lift from a pickup in tourism. The leisure sector overall is close to fully recovering from the deep losses caused by the COVID-19 pandemic.

Public-sector payrolls also held up well last month, increasing by 2,600. Thus far, state and local government jobs seem to be showing little effects from California’s massive budget deficits.

“But clearly that will be another factor,” said Sung Won Sohn, economics professor at Loyola Marymount University in Los Angeles.

Sohn and other economists worry that there are national, cyclical and state-specific threats to California’s employment and broader economic outlook.

Advertisement

Key pillars of the state’s economy continue to struggle.

Motion picture producers and other employers in the information sector show few signs of breaking out of the hiring doldrums, despite the film industry’s resolution of labor strikes last fall. Los Angeles’ motion picture and recording studio industries were down by 13,400 employees, or 12%, in April compared with the same month a year earlier. And many workers in the industry say conditions do not appear to be improving.

Large parts of the farm economy in the Central Valley remain sluggish, in part due to rising costs, tighter financial conditions and ongoing climate challenges.

Despite strong investments in artificial intelligence, layoffs have persisted at high-tech firms in the Bay Area and elsewhere. Scientific and technical companies shed jobs last month, and employment at computer systems design work and related services has been gradually declining.

Nationally, economists expect job growth to slow in the coming months, the result of persistently high interest rates and an expected pullback from consumers. The outlook is particularly dim in California.

Advertisement

“On the ground, there are several signs of even more slowdowns,” said Michael Bernick, an employment lawyer at Duane Morris in San Francisco and former director of the state’s EDD. Among them, he said, “small businesses continue to struggle statewide with higher prices and tightened consumer spending.”

He and other experts have a similar refrain about what ails the state: high costs, excessive regulation and unaffordable home prices, among other factors.

“We just have real challenges here in California that other states don’t face,” said Renee Ward, founder of Seniors4Hire.org, a Huntington Beach-based organization that helps older workers find employment.

She said the number of job seekers registered with her service has jumped 26% so far in 2024 from a year ago.

Advertisement
Continue Reading

Business

New Mexico weighs whether to toss Alec Baldwin criminal charges in 'Rust' shooting

Published

on

New Mexico weighs whether to toss Alec Baldwin criminal charges in 'Rust' shooting

A New Mexico judge is weighing whether to dismiss involuntary manslaughter charges against Alec Baldwin for his alleged role in the 2021 shooting death of the “Rust” movie cinematographer.

Baldwin’s attorneys argued during a court hearing Friday that special prosecutor Kari T. Morrissey had abused her power by allegedly withholding “significant evidence,” including witnesses favorable to Baldwin, during a January grand jury proceeding.

The 66-year-old actor‘s lawyers said he was a victim of an “overzealous prosecutor” who steered grand jury proceedings in an effort to win an indictment in the high-profile case. At issue is whether the grand jury had been fully advised that they could hear from Baldwin’s witnesses during the proceedings. The grand jurors spent a day and a half questioning witnesses who were introduced by the prosecutors.

“The fix was in,” Baldwin attorney Alex Spiro told the judge Friday.

The grand jury indicted Baldwin on an involuntary manslaughter charge in the shooting death of Halyna Hutchins, the 42-year-old cinematographer, who was rehearsing a scene with Baldwin on Oct. 21, 2021. Baldwin has pleaded not guilty.

Advertisement

At the conclusion of Friday’s hearing, New Mexico First Judicial District Judge Mary Marlowe Sommer said she would issue her ruling next week. Should she dismiss the case, it would mark the second time that the felony charges against Baldwin were dropped.

Marlowe Sommer’s decision is expected less than two months before Baldwin is scheduled to go on trial in a Santa Fe courtroom.

During the hearing, which was conducted virtually, Morrissey denied that she had acted in bad faith. She said she didn’t prevent jurors from getting answers to their questions or from seeking additional information. She told the judge that grand jurors had been given written instructions that outlined their ability to quiz other witnesses, including those favorable to the defense.

But because the jurors didn’t ask to hear from the witnesses who were on a list supplied by Baldwin’s lawyers, several key figures in the tragedy, including film director Joel Souza, property master Sarah Zachry and assistant director David Halls, were not called to testify. Instead, jurors heard from police officers, a crew member who was in the church and expert witnesses hired by prosecutors.

On the day of the shooting, Hutchins, Baldwin, Souza and about a dozen other crew members were gathered in an old wooden church at Bonanza Creek Ranch, south of Santa Fe, preparing for a scene. Hutchins, according to the actor, told him to pull his Colt .45 revolver from his holster and point it at the camera for an extreme close-up view. That’s when the gun went off.

Advertisement

Hutchins died from her wounds. Souza was injured and recovered.

Last month, Marlowe Sommer sentenced the film’s armorer, Hannah Gutierrez, to 18 months in a New Mexico women’s prison for her role in the shooting. Morrissey argued that Gutierrez was criminally negligent by allegedly bringing the live ammunition to the movie production and unwittingly loading one of the lead bullets into Baldwin’s gun. Gutierrez denies bringing the ammunition on set.

Baldwin’s prosecution has long been fraught.

Morrissey and her law partner Jason J. Lewis joined the case last year after the first team of prosecutors was forced to step down due to missteps, including trying to charge Baldwin on a penalty enhancement that wasn’t in effect at the time of the tragedy.

“The government looked a little sophomoric and unprofessional when they charged him for a crime that wasn’t a crime at the time,” said Los Angeles litigator Tre Lovell, who is not involved in the “Rust” shooting matter. “That was embarrassing.”

Advertisement

The original prosecutors also displayed bluster in media interviews, making statements about the need to hold Baldwin responsible for his actions. Defense attorneys have argued that such commentary was out of line and prejudicial against the actor.

Shortly after Morrissey and Lewis joined the case, they dropped the charges against Baldwin. At the time, they said they needed more time to review evidence and address issues raised by Baldwin’s team. Morrissey and Lewis reserved the right to refile the charges.

Immediately after the charges were dropped, Baldwin traveled to Montana to finish the filming of “Rust.”

On Friday, Morrissey said last year’s decision to drop the charges was made at the request of Baldwin’s lead attorney, Luke Nikas, who had presented evidence that the gun Baldwin was using had been modified. Subsequent tests showed the gun was functional that day, but during FBI testing in 2022, the gun was broken by forensic analysts who wanted to see how much pressure needed to be applied for the hammer to drop.

The damaged gun is one of several complications that prosecutors are facing. Legal experts have said that winning a conviction in Baldwin’s case is expected to be more difficult than in the trial of Gutierrez, whose job was to make sure the weapons were safe.

Advertisement

Baldwin was handed the prop gun that day and was told that it was “cold,” meaning there was no ammunition inside. In reality, the chamber of the revolver contained six rounds — five so-called dummies and the lead bullet that killed Hutchins.

“The state has not even alleged that Baldwin had a subjective awareness of a substantial risk that the firearm held live ammunition,” Nikas argued in the motion to dismiss the charges. “Without a subjective awareness, he could not have committed the crime of involuntary manslaughter, which requires that the defendant consciously disregarded a substantial and unjustifiable risk that his actions could cause another person’s death.”

Baldwin has argued, with support from Hollywood’s performers’ union SAG-AFTRA, that it wasn’t his job to be the gun safety officer on set.

The actor has said he was relying on other professionals to do their jobs to ensure a safe production.

Prosecutors have an obligation to present evidence in a “fair and impartial manner,” Baldwin’s attorneys said.

Advertisement

The judge grilled Morrissey on her thinking at the time, including an instance when she had interrupted a sheriff’s deputy and prevented her from answering a question about gun safety measures on set. Morrissey said that deputy was not an expert in film set protocols and that she instead wanted jurors to get “the most accurate information,” which would come from a veteran film crew member who was an expert witness.

Baldwin’s attorneys were also sharply critical of Morrissey for divulging during a media interview the date the grand jury was expected to meet. Morrissey said she took responsibility for providing to a reporter the initial date, which had been scheduled for mid-November. However, the matter was postponed, and the case wasn’t brought before the grand jury until two months later, in mid-January.

Lovell, the L.A. entertainment attorney, said he believes the case will go to trial and that efforts to throw out the indictment will be unsuccessful.

“Courts are really reluctant to dismiss cases brought by a grand jury,” Lovell said. “Courts have limited ability to review what goes to a grand jury unless it was provided in bad faith.”

Advertisement
Continue Reading

Business

Troubled EV maker Fisker closing Manhattan Beach headquarters

Published

on

Troubled EV maker Fisker closing Manhattan Beach headquarters

In an effort to stave off bankruptcy, electric-vehicle maker Fisker Inc. is closing its Manhattan Beach headquarters and has secured a $3.5-million lifeline as it continues to explore an acquisition or other strategic alternative.

The troubled company, which had about 300 employees in the 72,000-square-foot offices at the end of March, is moving its remaining workers to an engineering and distribution facility in La Palma in Orange County, said a person familiar with Fisker’s operations who was not authorized to comment.

In all, the company had roughly 1,135 employees as of mid-April, following an announced 15% cut to its workforce.

Fisker has been attempting to avoid bankruptcy since March, when it announced that talks over a strategic alliance with a major automaker had ended, squelching a deal that would have given it $150 million in new financing.

Advertisement

That caused its shares to collapse to pennies, prompting the New York Stock Exchange to delist the stock, which violated another debt agreement the company struck with an investor last year, according to a regulatory filing.

A major automaker, said to be Nissan, was reportedly in talks to invest in Fisker. Nissan was considering making the Fisker Alaska truck at a U.S. plant — a deal that would come with a $400-million investment, Reuters first reported. Fisker did not confirm the reports.

Fisker announced this week that it secured a $3.5 million short-term loan, as it continues to operate and sell its midsize Ocean SUV. The note is due June 24 and has the potential to increase to $7.5 million.

The Ocean, a competitor to Tesla’s Model Y, was released last year to mixed reviews; some praised its build and styling, but the car has been plagued by software glitches.

The National Highway Traffic Safety Administration has four investigations into the vehicle, including one opened this month after complaints that the SUV’s automatic emergency braking system randomly triggered.

Advertisement

Other probes are looking into reports that a door on the Ocean will not open and complaints about a loss of braking performance. The company has said it is working with the regulator.

Fisker said this week that it had added three dealers to its networks in California and New Jersey, which it began building after a plan to sell direct to consumers — like Tesla does — didn’t pan out. It also announced additional price cuts on some Ocean models.

In March, Fisker slashed the price on its entire lineup of 2023 Oceans by more than 30%. The company also said that it had paused production at its contract manufacturing plant in Austria, which produced about 10,200 Oceans last year.

Fisker was founded in 2016 by noted car designer Henrik Fisker, who has said the Ocean was inspired by California. The SUV features a full-length solar roof, an interior composed of “vegan” recycled plastic and a drop-down rear window that can fit a surf board.

Fisker is not the only startup that has been struggling amid a slowdown in the domestic market for electric vehicles and a rise in interest rates.

Advertisement

Rivian Automotive, an Irvine maker of electric trucks, has informed state officials it will lay off more than 120 employees beginning in June. In February, the company announced it was cutting 10% of its workforce. The company’s shares have lost more than half of their value since last year.

Continue Reading

Trending