What a debt crisis in the provinces says about governing China

IT IS a truth universally acknowledged, said China’s central-bank chief, Zhou Xiaochuan, recently, that huge debts are “the root of weakness in China’s macro financial system”. A truth less universally acknowledged is the role of politics. A big part of the debt problem stems from a dysfunctional relationship between central and local governments. Tensions between them pushed up debt to dangerous levels in 2015. Changing the rules seemed to have solved the problem for a while. But as in the film “Pride and Prejudice and Zombies”, the horror is back from the dead.

China is so vast that relations between the centre and periphery have always been problematic. As one epigram puts it: “The empire, long divided, must unite; long united, must divide.” During the past few years the centre has been stressing the need for unity. Convinced that local governments have been enjoying too much autonomy, it has been trying to exert greater control over them. Localities, however, keep pushing back.