China’s US$23 trillion local debt mess is about to get worse

City in trouble: A skater in action in a sports park, with the Xinyi mine in the background, in Hegang. The city has faced years of dwindling revenue from a coal industry in decline and a loss of taxpayers as its population shrank 16% in the decade through 2020. — Bloomberg

BEIJING: In 2021, a remote coal town in northeastern China was forced to undergo an unprecedented financial restructuring. Its struggles since are an ominous sign for President Xi Jinping as other heavily indebted municipalities look set to follow suit.

Hegang, a city with nearly a million people near the Russian border, had debt of more than double its fiscal income when it hit the headlines almost 18 months ago.