China local bodies’ debt skyrockets
31 Dec 2013 12:27 AM GMT
China on Monday announced the results of a long-awaited debt audit, revealing that liabilities carried by local governments ballooned to 17.9 trillion yuan ($2.95 trillion) as of the end of June.
The figure, released by the National Audit Office (NAO) in a statement on its website, compared with 10.7 trillion yuan as of the end of 2010 - an increase of 67 per cent.
Concerns have grown over the amount of debt in the country and its potential impact on the world’s second-largest economy, and Beijing embarked on the audit in July.
Disquiet about the burden centres on borrowing by local authorities, which have long used debt to fuel economic growth in their regions, often by pursuing projects that are not economically viable or sustainable.
China’s debt problem is considered to be a serious potential drag on its economy unless steps are taken to rein it in.
The local government debt burden was generally in line with economist estimates, including one made in early October by Bank of America Merrill Lynch of 17.2 trillion yuan.
The figure, released by the National Audit Office (NAO) in a statement on its website, compared with 10.7 trillion yuan as of the end of 2010 - an increase of 67 per cent.
Concerns have grown over the amount of debt in the country and its potential impact on the world’s second-largest economy, and Beijing embarked on the audit in July.
Disquiet about the burden centres on borrowing by local authorities, which have long used debt to fuel economic growth in their regions, often by pursuing projects that are not economically viable or sustainable.
China’s debt problem is considered to be a serious potential drag on its economy unless steps are taken to rein it in.
The local government debt burden was generally in line with economist estimates, including one made in early October by Bank of America Merrill Lynch of 17.2 trillion yuan.
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