For China’s barbecue capital, reality bites as debt risk stokes fire of economic distress
Firing up the grills boosted Zibo’s national profile and lured millions, but it has done little to economically transform the heavily indebted city
When video clips of crowds scarfing down barbecue skewers in the industrial city of Zibo went viral on social media last year, it became an unexpected role model for spurring consumption in other Chinese regions with economies in the doldrums.
While tourism can help drive traffic to amusement parks, restaurants, hotels, retailers, and transport providers, analysts say local governments are not likely to benefit significantly in terms of tax revenue.
“But it will help boost local employment, grow service industries and improve the city’s brand – which may attract more investment in the future,” said Sherry Zhao, senior director for Asia-Pacific international public finance scores at Fitch Ratings.
The local government of Zibo, in eastern China’s Shandong province, said in its latest financial report for the year 2023 and for the first half of 2024 – published last week – that its debt pressure had worsened. Authorities said poor land sales, weak assets, low credit ratings, and a high threshold for refinancing its debt were among the key reasons.
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In the first half of 2024, Zibo’s public expenditures and repayments of principal and interest on its outstanding debt totalled 22.1 billion yuan. But available financial resources amounted to only 20.6 billion yuan (US$3.12 billion), resulting in a deficit of 1.5 billion yuan, the financial report said, adding that the city’s overall debt growth was higher than the average in Shandong.
