Debt crisis looms for local governments

Falling revenue from land sales adds repayment risks, says ratings agency

Dwindling revenue from land sales and slower fiscal revenue growth may hurt local governments' ability to repay outstanding debt, a leading Chinese credit ratings agency said on Tuesday.

China Chengxin International Credit Rating Co Ltd, the Chinese unit of global ratings agency Moody's Investors Service, said in its report that the weakening property market poses the biggest threat for debt repayment, as land sales account for the bulk of the local governments' revenue.