China's cities are running out of money to pay huge COVID lockdown bills, report says

• China's zero-COVID strategy is having a big financial impact on local governments, CNN reported.
• They had a budget deficit of more than $1.65 trillion between January and October, CNN said.

Local governments in China are fast running out of cash, as they are being forced to maintain strict testing and quarantine restrictions required by China's zero-COVID strategy, CNN reported.

Data from China's Ministry of Finance reported by CNN showed that local governments in China spent considerably more than they brought in between January and October: to the tune of more than $1.65 trillion.

China's response to the coronavirus has been to follow a strict policy aimed at eliminating the virus completely. But the strategy is one that requires a lot of investment; for mass testing, city-wide lockdowns, and huge quarantine centers where people are brought to isolate.

And local governments have had to pay for much of this, CNN reported.

As a result, some local governments have delayed or suspended payments to coronavirus test providers and some are now asking residents to pay for their own coronavirus tests, CNN reported.

The Hong Kong-based South China Morning Post reported last month that several local governments had reduced their revenue targets, citing the coronavirus as well as other factors like China's beleaguered property market.

Bloomberg also reported in September that China's provinces were taking a financial hit from the strategy, with most posting a deficit for the first seven months of the year.

George Magnus, an associate at the China Centre at Oxford University, told CNN that local governments may cut funding to other services to keep funding the coronavirus strategy.

"Local governments are under huge pressure from the cost of maintaining zero-COVID, and we can already see this in the debt sustainability of several entities and [in] instances where public services are being scaled back, local assets or services sold and so on," he said.

The zero-COVID strategy has harmed China's economy more widely, by restricting movement and tourism and locking down cities of millions of people, which has also at times meant shutting down factories and manufacturing sites.

China has hinted that it might ease its COVID rules following mass protests over the weekend, sparked by the death of 1o people in an apartment fire.