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China’s plans to issue special government bonds to help local governments get their debts under control as it pushes them to pay their overdue bills gave Edward Zeng, the founder of a tech start-up, a glimmer of hope this month because he has been waiting for payment for years.
In 2019, Zeng’s tech company was acquired by a state-owned enterprise (SOE) for millions of yuan.
As part of the deal, his team took part in research and development tasks for a local government’s smart city project in southern China.
But the local government failed to pay the SOE, meaning it lacked the funding to complete the acquisition.
“Those smart city projects were the most important business segment for each local government at the time, with tens of billions of yuan invested in each across the country,” Zeng said.
However, following the emergence of the Covid-19 pandemic, many smart city projects began to default on payments to downstream companies, and the one Zeng’s team was working on laid off 30 per cent of its staff, including Zeng.