China's Local Debt Crisis Continues to Worsen and Spread Globally.

China's local government debt problem, estimated to be around $23 trillion, is making investors increasingly nervous and threatens to be a drag on the world's second-largest economy for years to come. While the chance of a municipal default in China is relatively low given Beijing's implicit guarantee on the debt, the bigger worry is that local governments will have to make painful spending cuts or divert money away from growth-boosting projects to continue repaying their debt. This poses a challenge for President Xi Jinping's ambition of doubling income levels by 2035 while reducing the gap between rich and poor, which is key for social stability as he seeks to rule the Communist Party for potentially the next decade or more.