Local debt is the key factor to the success of real estate regulation

Absrtact: The risk of the real estate regulation comes from two aspects: first, whether the local government financing platform assets condition and the local fiscal revenue and expenditure will deteriorate seriously; second, whether the Greek crisis will worsen and spread and meet with domestic real estate regulation. The risk of this round of real estate regulation comes from two aspects: first, whether the local government financing platform assets condition and local fiscal revenue and expenditure will deteriorate seriously; the second is whether the Greek crisis will worsen and spread and meet with domestic real estate regulation.　　But the risk of contagion from the Greek crisis is generally considered to be far less likely than the local debt crisis. The central bank research results show that the local government's more than 3,800 investment and financing platforms total assets of nearly 9 trillion yuan, the debt rose to 5.26 trillion yuan, the average balance of assets and liabilities rate of about 60%.　　The 5.26 trillion-dollar debt is equivalent to 15.7% of the country's GDP last year and 76.8% of the country's revenue. If the current loan rate is based on the project cycle of 20 years, then the annual repayment amount of 520.6 billion yuan, which is equivalent to 2009 local revenue of 16.3%.　　(pressure from local governments will also be one of the key factors constraining current and future interest rate decisions) while a significant portion of local government revenue comes from land sales and real estate taxes, once prices fall, or when interest rates enter the upward cycle, the fiscal pressure on local governments is obvious. According to official figures for 1997, more than 60% per cent of the collateral in local government financing is land or land attachments, while a significant portion of the new debt in recent two years is secured by local financial guarantees or government credit.　　In the event of a default, banks are likely to lose their share.　　The financial burden of local governments, whose risks are more directly related to the normal functioning of the administrative system, may be a more intractable risk to policymakers than the livelihood issues. "According to the Expo financial articles comprehensive analysis"