25 May 2019

Local debt amounts to 17.89 trn yuan at end-June, NAO says

China’s local government debt amounted to 17.89 trillion yuan (US$2.95 trillion), including 10.89 trillion yuan of direct debt and 7 trillion yuan of contingent liabilities, at the end of June, the National Audit Office (NAO) said in a statement on its website on Monday.

Of the contingent liabilities, 2.67 trillion yuan are liabilities guaranteed by the local governments while 4.34 trillion yuan are assumed liabilities, the NAO said, citing a nationwide audit made in August and September by 54,400 staff. At the end of 2012, local governments’ guarantee liabilities totaled 2.77 trillion yuan while assumed liabilities were 5.93 trillion yuan.

Of the direct debt, 22.92 percent would have matured in the second half of 2013 while 21.89 percent will mature in 2014, it said. About 16.9 percent of all the outstanding contingent liabilities will mature next year, it said.

At the end of June, the central government recorded a direct debt of 9.81 trillion yuan and an additional 2.57 trillion yuan of contingent liabilities, 2.29 trillion yuan of which came from China Railway Corp.

China’s local debt problem is manageable as the total direct debt of the central and local governments was about 36.74 percent of the nation’s gross domestic product at the end of 2012, NAO spokesperson Chen Chenzhao {陳塵肇} said in separate statement on the auditor’s website.

Even if the contingent liabilities that need to be paid by fiscal resources are included, the ratio would only be about 39.43 percent, which is lower than the 60 percent level of the international benchmark, Chen said.

– Contact HKEJ at [email protected]





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