Risks associated with local government debt are largely controllable, People’s Daily reported Monday, citing Jia Kang, director of the Research Institute for Fiscal Science of the Ministry of Finance. Tax collection, dividends from state enterprises and land sales continue to underpin local economies, enabling them to grow their assets to 31.7 trillion yuan (US$5.16 trillion) in 2012. The figure compares with a combined debt of 20 trillion, the report said. Even if a debt crisis were to occur in a region, the central government would be able to step in thanks to its massive reserves, the report said. Also, Beijing can curb any such crisis by restructuring local government debt, Jia was quoted as saying.
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