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China builder says local govts owe US$8b in overdue bills
[BEIJING] A Chinese infrastructure firm is owed more than 50 billion yuan (US$8 billion) in unpaid bills by local governments, said its billionaire founder, who is taking six debtors to court as creditors grow nervous over China's massive regional debt.
China Pacific Construction Group, ranked last year as a Fortune 500 company bigger than Barclays Plc and with annual revenues of US$59.6 billion, is suing the six local government over 1 billion yuan in payments that were due at the end of 2012.
"Different levels of government owe us a lot of money," Yan Jiehe told Reuters in a telephone interview, saying he had no choice but to act. "The overdue debt should now exceed 50 billion yuan," he added.
"We are suing for around one billion yuan this time."
Beijing is struggling to rein in local government debt, estimated around US$3 trillion, without crippling the broader economy. Local governments rushed to finance infrastructure and real estate projects, especially after the 2008/09 global financial crisis, in efforts to stimulate economic growth.
Mr Yan did not name the six governments that are being sued, except to say that they are located in the central Hunan province, the northern provinces of Hebei and Shandong, and the southwestern provinces of Guizhou and Yunnan.
The finance ministry declined comment when contacted by Reuters.
China's government comprises county, village, town, city, provincial and central authorities and Mr Yan did not say which level he was referring to.
While it is common for Chinese firms to sue governments over business disputes, it is unusual for authorities to be sued for late payments, said a researcher at a state think tank, who declined to be named as he cannot speak to the foreign media.
"If he wins, he probably won't get a lot of money, and the credit rating of the governments will be affected," the researcher said.
Chinese courts are tightly controlled by the ruling Communist Party, and it is rare for private individuals or companies to win lawsuits against the state.
Mr Yan, listed by the Hurun rich list as China's seventh-wealthiest man last year with assets of US$14.2 billion and with a reputation for being outspoken, is determined to find a solution through the courts.
"We are still searching for a proper way to have our money back," he said. "I believe the legal system will limit the abuse of power."