Beijing is anxious to placate the worries of the masses by making their lives ever more prosperous, well aware that that food prices and salary levels are the first things that people will start protesting about. To that end, local government officials borrow money endlessly in an effort to show people how the CCP can make things better.
While local governments are by law not allowed to fall into debt, the companies that those governments create can borrow huge amounts. In Guiyang, official figures show that the municipality is a miniscule 17% of it's GDP, but the companies that have been created by the local governmnet, if the liabilities were taken lumped together, add up to 58% of Guiyang's GDP. The same strategy has been repeated across the country.
Land grabbing has been a wheeze long employed by embittered officials - kicking the farmers off a strip of land and then selling it to property developers for a huge markup. The current property bubble makes selling apartments almost impossible, and has crippled the economy of ghost cities like Ordos in Inner Mongolia. Putting up new high rises and telling people that they have places to live might be well and good for party propaganda, but it does little to ease China's debt problem.
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