China admits local govt debt levels unknown, could be higher than estimated
BEIJING (Reuters) - A senior Chinese official said on Friday that the government did not know precisely know how much debt local governments had built up and warned that it could be more than previous estimates.
Estimates of local government debt range from Standard Chartered's 15 percent of the country's GDP at end-2012 to Credit Suisse's 36 percent. Fitch put the figure at 25 percent when it downgraded China's sovereign debt rating in April.
Vice Finance Minister Zhu Guangyao said China had not released official figures since a 2010 auditing report that put local government debt at 10.7 trillion yuan.
"Currently, <according to> nationwide surveys, I think this number will rise," Zhu said, defending the debt as mostly geared toward fuelling infrastructure projects.
"A very important task for this administration is to clearly determine the level of local financing platforms," Zhu told reporters at a press briefing on high-level talks with U.S. officials in Washington next week.
Dealing with the systemic risk posed by local government debt is seen as one of the key priorities for the administration of China's new president, Xi Jinping.
China's budget law forbids local governments from taking on debt directly, but localities have borrowed trillions through special-purpose vehicles known as local-government financing vehicles.
Concerns have grown that the debts incurred could sour as many infrastructure projects in China are for public use and not profitable. Many local governments have also borrowed from companies in private arrangements at high cost, with the money often used in speculative real estate projects.
Zhu said Chinese banks have reported 9.54 trillion yuan in loans to local financing platforms.
"The bad debt rate for these loans is only 1 percent," he said.
(Reporting by Michael Martina; Editing by Sanjeev Miglani)
- Tweet this
- Share this
- Digg this
- North Korea says leader Kim Jong Un's powerful uncle executed |
- North Korea says Jang Song Thaek, uncle of leader Kim Jong Un, executed
- Ex-Kaupthing bankers convicted of abuses related to Qatari investment
- 'Unfit' defendant in British phone-hacking case dropped from trial
- UK economy set for fastest growth in seven years in 2014 - BCC