China’s Guangxi Zhuang Autonomous Region circulated a document titled, “Guangxi Zhuang Autonomous Region Investment Management Measures” for public review and opinion. The review period is June 5 to June 16. The proposed measures would exclude the government from taking on the liabilities of state-owned enterprises (SOE’s). This may indicate that the government no longer has the resources to cover SOE debt.
Article 15 of the measure states:
SOE’s and state-controlled enterprises should follow the principle of prudence in external investment and financing, strictly control the asset-liability ratio, and not take on too much debt. … When doing debt financing, they should declare that they do not carry government financing functions, that the debt raised is for corporate use, and that the local government does not assume responsibility for the debt. …
Money which is raised from the market by SOE’s and which results in debt but which lacks (needed) continuous funding or … results from decision-making errors, are the responsibility of the SOE’s to handle. Following the principle of “who raised the debt is responsible for the debt;” the government does not assume any responsibility for debt repayment.”
Source: Guangxi Government Site, June 4, 2023