BEIJING — China will contain the growth of hidden debt with active, prudent steps to defuse local debt risk, Finance Minister Xiao Jie said on Aug 29.
Xiao was briefing lawmakers on a State Council report about the government’s budget enforcement this year at a five-day bimonthly session of the National People’s Congress Standing Committee that opened on Aug 28. Top legislator Zhang Dejiang attended the session.
To guard against local debt risks, China has stepped up management of local government debt with improved regulation and strengthened inspection of irregularities in local financing, the minister said.
The central government will next press local governments to improve quota management and budget management, as well as to speed up the replacement of existing debt, said Xiao.
To curb growth in hidden debt, local governments are now only allowed to borrow through bond issues, with debt ceilings in accordance with local needs, he said.
Outstanding local government debt stood at 15.9 trillion yuan ($2.4 trillion) as of June 30 this year, slightly higher than 15.3 trillion yuan at the end of 2016 but below this year’s target ceiling of 18.8 trillion yuan.