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Local government debts seen controllable
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China’s local government debts are generally controllable despite huge problems in some regions, Minister of Finance Lou Jiwei said yesterday.
“The size of China’s local government debts is under control, and the growth is slowing,” Lou said in an interview aired by the official China Central Television yesterday. “But there are relatively big problems in the areas where debts were mounting quickly earlier.”
His remarks were the latest on the debt issue that is widely-watched by investors and officials.
Standard Chartered, Fitch and Credit Suisse have estimated local government debts in China equivalent to between 15 percent and 36 percent of the country’s output, or as much as US$3 trillion based on the World Bank’s GDP figures for 2012.
A report by Everbright Securities Co said some 127 billion yuan (US$20.8 billion) of so-called local government financing vehicle notes will expire in the second half of this year, more than double the 62.7 billion yuan that matured in the first six months.
A National Audit Office report in 2011 said the local government debts totaled 10.7 trillion yuan at the end of 2010.
“We are strengthening our communication with some local governments while the NAO is conducting a new round of debt auditing,” Lou said yesterday.
In July, the NAO said it would conduct a nationwide audit of all government debts at the request of the State Council, China’s Cabinet.
Lou’s comments echoed President Xi Jinping’s remarks made on Tuesday that the country is able to handle the problem of local government debts.
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