An article, said to be the minutes of an internal meeting of Kunming City Investment Companies, was widely spread on the Internet. The triggering event for the meeting was that Kunming Land Investment Company struggled to pay back a 200 million Yuan (US$28) debt which was due on May 19. Kunming is the capital city of Yunnan Province and is supposed to be the richest city in Yunnan.
A few highlights of the minutes are:
To help Kunming Land Investment Company make its payment, Kunming city gave 130 million Yuan from its fiscal budget. The investment company itself raised 35 million Yuan, and Kunming Land Reserve Investment Company provided 40 million.
Collectively, city investment companies in Kunming have 20 billion Yuan in debt due in the second half of this year. Kunming city does not have the money. The Yunnan Province government might have some money, but a Deputy Governor already stated that the province will not rescue every company.
The Deputy Major of Kunming led three chairmen of three investment companies, including Kunming Industry Investment Company, Kunming Urban Investment Company, and Dian Investment Company, to Shanghai on May 20 and 21. They were to ask Shanghai Urban Investment Company to transfer some money – Shanghai was tasked to provide Yunnan Province with financial support (several hundred billion Yuan each year), but it didn’t transfer money last year.
The Kunming city government has gathered all the money it can gather from its investment companies. If there is another debt crisis, the city has no money and no means but to issue new debt.
All loans (to Kunming city investment companies) that can be extended have already been extended. Principle and interest payments on fixed asset loans have all been deferred. Kunming Transportation Investment Company, Kunming Production Investment Company, Kunming Land Investment Company, Kunming Rail Transit, and Kunming Urban Investment Company have already accomplished this extension.
1. Pingcong website
2. Net Ease, May 23, 2023