Chinese cities eyes data assets as fiscal woes bite

livemint.com:

China’s property slump has weighed heavily on land sales, drying up a key source of revenue for local governments. Now, authorities are looking at an unconventional way to fill up their coffers: data monetization. The protracted property downturn has hit local governments hard, with many struggling under huge piles of debt.

What they also have a lot of is data, such as traffic figures showing how many cars are on the roads and in parking lots. Authorities in places like China’s wealthier coastal provinces have started looking at ways to turn that data into intangible assets on the balance sheets of local government financing vehicles. LGFVs were created to mobilize financial resources to meet central government development targets.

While the mechanisms have been instrumental in funneling funds into infrastructure, they have also amassed trillions in debt in the process, sparking concern about spillover to other parts of the economy. Central authorities have repeatedly asked local officials to curb debt risks, and Beijing has taken a more active role recently, looking to ease the burden for cash-strapped administrations via measures like debt swaps. Efforts to refashion data stockpiles as new financial pipelines for local governments are starting to bear fruit in some places.

In March, the state-owned Wenzhou Big Data Operation Company in the eastern province of Zhejiang received 3.78 million yuan ($521,436) of bank loans using its data assets as collateral. In neighboring Jiangsu province, the state-owned public bus operator in the capital city of Nanjing received CNY10 million of data-backed bank credits earlier this year. The novel approach isn’t just being used by local governments, corporations are testing the waters