A Chinese City Is Asking Its Companies To Pay Public Sector Salaries Because It Can’t Afford Them

By Jake Maxwell Watts

July 9, 2013

Local government debt is now so unwieldy in China that some desperate district governments have turned to the private sector for help to pay their employees.

The Chinese language magazine of state-run Xinhua news agency reported on Friday that the city of Ordos, in northern China’s Inner Mongolia, had accumulated almost six and a half times its annual revenue in debt—or 240 billion yuan ($39 billion). Some of the city’s districts had borrowed from businesses to meet salary obligations.

The city has already developed an infamous reputation as the biggest ghost town in China. When large deposits of coal were discovered about 20 years ago, developers moved in and built a shining new city capable of housing hundreds of thousands of people, complete with skyscrapers and a vast square called Genghis Khan Plaza. But the people didn’t follow and Ordos began to accumulate debt. Two decades on, the mines are struggling, as demand for coal has slumped amid China’s economic struggles.

Read more at Quartz.

(Image via Flickr user AdamCohn)


By Jake Maxwell Watts

July 9, 2013

http://www.govexec.com/excellence/promising-practices/2013/07/chinese-city-asking-its-companies-pay-public-sector-salaries-because-it-cant-afford-them/66272/