Lo­cal debt much big­ger than pre­vi­ous es­ti­mate

China Daily (Canada) - - NEWSCAPSULE -

China’s lo­cal gov­ern­ment debt and con­tin­gent li­a­bil­i­ties surged to 17.89 tril­lion yuan ($2.93 tril­lion) as of the end of June, ac­cord­ing to an au­dit.

The fig­ure, re­leased by the Na­tional Au­dit Of­fice on its web­site, im­plied a 67 per­cent rise from a pre­vi­ous es­ti­mate of 10.7 tril­lion yuan at the end of 2010.

“We be­lieve the mar­kets and the Chi­nese gov­ern­ment should be alarmed by the rapidly ris­ing lever­age, but we do not be­lieve China is on the brink of a debt cri­sis, es­pe­cially if the new lead­ers can take de­ci­sive mea­sures to ar­rest its ris­ing lever­age,” Lu Ting, an econ­o­mist at Bank of Amer­ica Mer­rill Lynch in Hong Kong, said in a note Mon­day.

Lu cited the cen­tral gov­ern­ment’s “very low” ra­tio of debt to GDP, which stands at 21 per­cent.

GUO LIL­IANG / FOR CHINA DAILY

Peo­ple from across China gath­ered in Chair­man Mao Ze­dong’s home­town of Shaoshan in Hu­nan prov­ince to com­mem­o­rate the 120th an­niver­sary of his birth on Dec 25.

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