This study employs a CES production function to construct a theoretical model of labor income share and uses a two-way fixed effects model to test the causal effects of local government debt (LGD) on the labor income share of enterprises. Local government debt governance policies are utilized as exogenous shocks, and a DID (Difference-in-Differences) model is applied for endogeneity testing. The results have passed a series of robustness checks. The findings suggest that LGD decreases the share of firms’ labor income. The mechanism analysis suggests that LGD lowers the labor remuneration of residents, the employment of labor in enterprises, and the size of bank loans mainly; while raising the cost of using funds in enterprises. Moreover, this negative effect is more apparent in non-state-owned enterprises, small and medium-sized enterprises, and enterprises with high financing constraints. This study presents new evidence on how the labor income share of enterprises is affected from the perspective by local governments in China. It has important implications for further deepening local government debt governance and achieving common prosperity.

Key information about China External Debt: % of GDP

• China External Debt accounted for 13.4 % of the country's Nominal GDP in 2023, compared with the ratio of 13.7 % in the previous year.
• China External Debt: % of Nominal GDP data is updated yearly, available from Dec 1985 to Dec 2023.
• The data reached an all-time high of 17.0 % in Dec 2014 and a record low of 5.1 % in Dec 1985.

CEIC calculates External Debt as % of Nominal GDP from annual External Debt and annual Nominal GDP. The State Administration of Foreign Exchange provides External Debt in USD. The National Bureau of Statistics provides Nominal GDP in local currency. Federal Reserve Board average market exchange rate is used for currency conversions.


Related information about China External Debt: % of GDP

• In the latest reports of China, Current Account recorded a surplus of 146.9 USD bn in Sep 2024.
• Foreign Direct Investment (FDI) fell by 8.1 USD bn in Sep 2024.
• China Direct Investment Abroad expanded by 33.9 USD bn in Sep 2024.
• Its Foreign Portfolio Investment increased by 36.9 USD bn in Jun 2024.
• The country's External Debt reached 2,545,309.4 in Jun 2024.
• The country's Nominal GDP was reported at 4,166.8 USD bn in Mar 2023.

In 2022, 35 percent of Guangxi's land transfer revenue were contributed by urban investment groups, signalling systematic problems in the province's real estate market. Urban investment groups are mostly commercial entities set up by the local governments, and the debt situation within these groups, together with debts accumulated by local governments is a long-term risk to the Chinese economy.

Key information about China Government Debt: % of GDP

• China Government debt accounted for 25.6 % of the country's Nominal GDP in Dec 2024, compared with the ratio of 25.1 % in the previous quarter.
• China government debt to GDP ratio data is updated quarterly, available from Mar 2014 to Dec 2024.
• The data reached an all-time high of 25.6 % in Dec 2024 and a record low of 14.0 % in Mar 2014.

CEIC calculates quarterly Government Debt as % of Nominal GDP from quarterly Government Debt and rolling sum of quarterly Nominal GDP. The Ministry of Finance provides Government Debt in local currency. The National Bureau of Statistics provides Nominal GDP in local currency. Government Debt covers Central Government only.


Related information about China Government Debt: % of GDP

• In the latest reports, China National Government Debt reached 4,230.0 USD bn in Dec 2023.
• The country's Nominal GDP reached 4,166.8 USD bn in Mar 2023.

The impact of local government debt on the labor income share.

Key information about Hong Kong SAR (China) National Government Debt

• Hong Kong SAR (China) National Government Debt reached 190.1 USD bn in Mar 2024, compared with 181.7 USD bn in the previous year.
• Hong Kong SAR (China) National Government Debt data is updated yearly, available from Mar 2003 to Mar 2024.
• The data reached an all-time high of 190.1 USD bn in Mar 2024 and a record low of 45.3 USD bn in Mar 2003.

CEIC converts annual Government Debt into USD. The Treasury provides Government Debt in local currency. The Federal Reserve Board period end market exchange rate is used for currency conversions. Government Debt covers Provision for Pensions, Bonds and Notes Issued and Other Liabilities. Government Debt is in annual frequency, ending in March of each year.


Related information about Hong Kong SAR (China) National Government Debt

• In the latest reports, Hong Kong SAR (China) Consolidated Fiscal Balance recorded a deficit equal to 6.1 % of its Nominal GDP in Sep 2024.
• The country's Government debt accounted for 49.1 % of its Nominal GDP in Mar 2024.
• Hong Kong SAR (China) Nominal GDP reached 91.4 USD bn in Mar 2023.

Contains data from the World Bank's data portal. There is also a consolidated country dataset on HDX.

Debt statistics provide a detailed picture of debt stocks and flows of developing countries. Data presented as part of the Quarterly External Debt Statistics takes a closer look at the external debt of high-income countries and emerging markets to enable a more complete understanding of global financial flows. The Quarterly Public Sector Debt database provides further data on public sector valuation methods, debt instruments, and clearly defined tiers of debt for central, state and local government, as well as extra-budgetary agencies and funds. Data are gathered from national statistical organizations and central banks as well as by various major multilateral institutions and World Bank staff.

Key information about Hong Kong SAR (China) Private Debt: % of Nominal GDP

• Hong Kong SAR (China) Private Debt accounted for 195.76 % of its Nominal GDP in Dec 2024, compared with a ratio of 198.84 % in the previous quarter
• Hong Kong SAR (China) Private Debt contribution to Nominal GDP ratio is updated quarterly, available from Dec 1973 to Dec 2024, with an average share of 122.27 %
• The data reached an all-time high of 226.63 % in Jun 2021 and a record low of 41.72 % in Dec 1976

CEIC calculates quarterly Private Debt as % of Nominal GDP from quarterly Private Debt and quarterly Nominal GDP. Private Debt is calculated by subtracting Domestic Loans to Financial Corporations and Stockbrokers from Total Domestic Loans. Hong Kong Monetary Authority provides Private Debt in local currency. Census and Statistics Department provides Nominal GDP in local currency. Private Debt includes Government sector, excluding Exchange Fund. Private Debt prior to Q4 2018 excludes Working Capital Loans.

This study employs a CES production function to construct a theoretical model of labor income share and uses a two-way fixed effects model to test the causal effects of local government debt (LGD) on the labor income share of enterprises. Local government debt governance policies are utilized as exogenous shocks, and a DID (Difference-in-Differences) model is applied for endogeneity testing. The results have passed a series of robustness checks. The findings suggest that LGD decreases the share of firms’ labor income. The mechanism analysis suggests that LGD lowers the labor remuneration of residents, the employment of labor in enterprises, and the size of bank loans mainly; while raising the cost of using funds in enterprises. Moreover, this negative effect is more apparent in non-state-owned enterprises, small and medium-sized enterprises, and enterprises with high financing constraints. This study presents new evidence on how the labor income share of enterprises is affected from the perspective by local governments in China. It has important implications for further deepening local government debt governance and achieving common prosperity.

Key information about Macau SAR (China) Household Debt: % of GDP

• Macau SAR (China) household debt accounted for 80.6 % of the country's Nominal GDP in Dec 2024, compared with the ratio of 81.2 % in the previous quarter.
• Macau SAR (China) household debt to GDP ratio is updated quarterly, available from Dec 2001 to Dec 2024.
• The data reached an all-time high of 166.4 % in Dec 2022 and a record low of 17.0 % in Dec 2006.

CEIC calculates quarterly Household Debt as % of Nominal GDP from quarterly Household Debt and quarterly Nominal GDP. The Monetary Authority of Macao provides Household Debt in local currency. Statistics and Census Service provides Nominal GDP in local currency. Loans are used due to the lack of Flow of Funds statistics.


Related information about Macau SAR (China) Household Debt: % of GDP

• In the latest reports, Macau SAR (China) Household Debt reached 42.0 USD bn in Mar 2023.
• Money Supply M2 in Macau SAR (China) increased 8.0 % YoY in Dec 2024.
• Macau SAR (China) Foreign Exchange Reserves was measured at 30.0 USD bn in Jan 2025.
• The Foreign Exchange Reserves equaled 22.3 Months of Import in Jan 2025.
• Macau SAR (China) Domestic Credit reached 31.7 USD bn in Nov 2024, representing an drop of 11.1 % YoY.
• The country's Non Performing Loans Ratio stood at 5.5 % in Nov 2024, compared with the ratio of 5.4 % in the previous month.

Depicted is the budget balance in relation to the GDP in China which amounts to approximately -8.57 percent in 2025.Fluctuating decline between 1982 and 2025Compared to the earliest depicted observation from 1982 this is a total decrease by approximately 8.79 percentage points. The trajectory from 1982 to 2025 shows however that this decrease did not happen continuously.Fluctuating rise between 2025 and 2030The budget balance will be about -8.11 percent in 2030, according to forecasts. From 2025 onwards, there is an overall increase by approximately 0.46 percentage points.The indicator describes the general government net lending/borrowing which is calculated as revenue minus total expenditure. The International Monetary Fund defines the general government expenditure as consisting of total expense and the net acquisition of nonfinancial assets. The general government revenue consists of the revenue from taxes, social contributions, grants receivable, and other revenue.

Key information about Macau SAR (China) Household Debt

• Macau SAR (China) Household Debt reached 42.0 USD bn in Mar 2023, compared with the reported number of 41.8 USD bn in the previous quarter
• Macau SAR (China) Household Debt: USD mn data is updated quarterly, available from Dec 1998 to Mar 2023
• The data reached an all-time high of 42.0 USD bn in Mar 2023 and a record low of 2.4 USD bn in Jun 2003

CEIC converts quarterly Household Debt into USD. The Monetary Authority of Macao provides Household Debt in local currency. The Monetary Authority of Macau period end market exchange rate is used for currency conversions. Loans are used due to the lack of Flow of Funds statistics.


Further information about Macau SAR (China) Household Debt

• In the latest reports, Macau SAR (China) Household Debt accounted for 170.1 % of the country's Nominal GDP in Mar 2023
• Money Supply M2 in Macau SAR (China) increased 89.4 USD bn YoY in Apr 2023
• Macau SAR (China) Foreign Exchange Reserves was measured at 27.0 USD bn in May 2023
• The Foreign Exchange Reserves equaled 18.3 Months of Import in Apr 2023
• Macau SAR (China) Domestic Credit reached 36.7 USD bn in Apr 2023, representing an increased of 20.3 % YoY

On the 2024 Fortune China 500 ranking for real estate companies, China’s leading real estate developer Poly Real Estate ranked first with a total revenue of 74 million U.S. dollars, followed by Greenland Holdings and Country Garden. Real estate market in China  In the last 20 years, China’s real estate market has experienced its most prosperous development. Land purchase has also become an important source of financial revenue for many local governments. The housing price increased so rapidly, especially in larger cities, that the government had to take measures to restrict investment. With the slowdown of China’s economic development and gradually saturated market, people are also afraid of the burst of the real estate bubble. While the real estate price in smaller cities tended to stay stable or even decrease, there is still growing potential for real estate prices in larger cities, especially the first-tier cities. China’s consumers are increasingly interested in the high-quality real estate products built by leading real estate developers. Leading real estate developers in China  Compared to the ranking in 2021, there were three new members entering the leading ten real estate developer club in 2022. The larger developers became stronger as they had advantages in land acquisitions, financing, marketing and pricing power which is difficult for smaller developers to catch up with. Thus, consolidation is also very common among China’s real estate developers. In 2022, two real estate giants disappeared from the fortune 500 ranking list, Evergrande and Sunac. Affected by the changing real estate market, they were facing cash flow problems and were affected heavily by the debt crisis.

Key information about Macau SAR (China) Private Debt: % of Nominal GDP

• Macau SAR (China) Private Debt accounted for 131.13 % of its Nominal GDP in Dec 2024, compared with a ratio of 132.80 % in the previous quarter
• Macau SAR (China) Private Debt contribution to Nominal GDP ratio is updated quarterly, available from Dec 2001 to Dec 2024, with an average share of 62.80 %
• The data reached an all-time high of 290.11 % in Dec 2022 and a record low of 41.10 % in Mar 2007

CEIC calculates quarterly Private Debt as % of Nominal GDP from quarterly Private Debt and quarterly Nominal GDP. Private Debt is calculated by subtracting Private Credits to Non Monetary Financial Institutions from Total Private Credits. The Monetary Authority of Macao provides Private Debt in local currency. Statistics and Census Service provides Nominal GDP in local currency.

Key information about Hong Kong SAR (China) External Debt: Short Term

• Hong Kong SAR (China) External Debt: Short Term value stood at 1,166.6 USD bn in Sep 2024, compared with 1,138.2 USD bn in the previous quarter.
• Hong Kong SAR (China) External Debt: Short Term data is updated quarterly, available from Mar 2001 to Sep 2024.
• The data reached an all-time high of 1,243.6 USD bn in Sep 2021 and a record low of 217.6 USD bn in Jun 2003.

CEIC calculates Short Term External Debt as the sum of Short Term External Debt breakdowns for General Government, Monetary Authorities, Banks and Other Sectors and converts it into USD. Census and Statistics Department provides Short Term External Debt in local currency based on BPM6. The Federal Reserve Board period end market exchange rate is used for currency conversions. Short Term External Debt for General Government is not released due to relatively insignificant value (less than HK$10 million) and/or in order to safeguard confidentiality of information provided by individual establishments. Short Term External Debt prior to Q1 2002 is based on BPM5.


Related information about Hong Kong SAR (China) External Debt: Short Term

• In the latest reports of Hong Kong SAR (China), Current Account recorded a surplus of 12.9 USD bn in Jun 2024.
• Foreign Direct Investment (FDI) increased by 27.0 USD bn in Sep 2024.
• Hong Kong SAR (China) Direct Investment Abroad expanded by 9.6 USD bn in Jun 2024.
• Its Foreign Portfolio Investment increased by 955.0 USD mn in Jun 2024.
• The country's Nominal GDP was reported at 91.4 USD bn in Mar 2023.

Endogenous Test: IV regression.

Key information about Macau SAR (China) Domestic Credit

• Macau SAR (China) Domestic Credit reached 31.7 USD bn in Nov 2024, compared with a reported figure of 32.5 USD bn in the previous month
• Macau SAR (China) Domestic Credit data is updated monthly
• It is available from Jun 1984 to Nov 2024 and averaged 2.7 USD bn
• The data reached an all-time high of 36.7 USD bn in Apr 2023 and a record low of -9.2 USD bn in Jan 2012

CEIC calculates monthly Domestic Credit as the sum of Net Claims of Monetary Institutions on Public Sector and Private Sector that includes Loans and Advances, Bank Acceptances and Trade Bills Discounted, and Financial Applications and converts it into USD. The Monetary Authority of Macao provides Domestic Credit in local currency. The Monetary Authority of Macau period end market exchange rate is used for currency conversions.


Further information about Macau SAR (China) Domestic Credit

• In the latest reports, Macau SAR (China) Domestic Credit represented an drop of 11.1 % YoY in Nov 2024
• Money Supply M2 in Macau SAR (China) increased to 97.5 USD bn YoY in Nov 2024
• Macau SAR (China) Foreign Exchange Reserves was measured at 29.4 USD bn in Dec 2024
• The Foreign Exchange Reserves equaled 21.1 Months of Import in Dec 2024
• The country's Non Performing Loans Ratio stood at 5.5 % in Nov 2024, compared with the ratio of 5.4 % in the previous month
• Household Debt of Macau SAR (China) reached 80.5 % in Sep 2024, accounting for 80.5 % of the country's Nominal GDP

Key information about Macau SAR (China) Foreign Portfolio Investment: Debt Securities

• Macau SAR (China) Foreign Portfolio Investment: Debt Securities fell by 7.842 USD bn in Dec 2023, compared with an increase of 1.105 USD bn in the previous year.
• Macau SAR (China) Foreign Portfolio Investment: Debt Securities data is updated yearly, available from Dec 2002 to Dec 2023.
• The data reached an all-time high of 11.486 USD bn in Dec 2018 and a record low of -7.842 USD bn in Dec 2023.

CEIC converts annual Foreign Portfolio Investment: Debt Securities into USD. The Monetary Authority of Macao provides annual Foreign Portfolio Investment: Debt Securities in local currency. The Monetary Authority of Macao average market exchange rate is used for currency conversions.

Mechanism analysis.

Cross-sectional analysis 2.