China local debt 'double audit level'
Ex-minister says provinces and cities may owe more than 20 trillion yuan
Bloomberg in Beijing
Mainland local governments may have more than 20 trillion yuan (HK$25 trillion) of debt, former finance minister Xiang Huaicheng said.
That is almost double the figure given in a 2011 report by the National Audit Office.
The combined debt of the central government and the provinces and cities might now be more than 30 trillion yuan, Xiang said at the Boao Forum.
Local governments had 10.7 trillion yuan of debt at the end of 2010, the auditor said in its report.
"It seems the central government's debt level is quite transparent, while local government debt isn't, and therefore it's not easy to get a clear picture," Xiang said at the weekend.
He said that since he retired, he was no longer "within the system", and that his comments were based on his own estimates. Xiang served as finance minister from 1998 to 2003.
Beijing has sought to curtail borrowing by local governments because of concerns that banks will be saddled with bad debts.
The central bank estimated in 2011 that local governments had set up more than 10,000 financing arms to fund the construction of roads, bridges and sewage plants.
"We recognise some progress has been made by the central authorities to keep that level of indebtedness and the local public finance under better watch," International Monetary Fund managing director Christine Lagarde said at the forum on Sunday. "To make sure the borrowing by local authorities is actually kept under control and not diverted through various agencies or off-balance sheet structures is critical to actually keep public finances under control."
The public did not need to be alarmed by the level of government debt because as a ratio of gross domestic product it was "not particularly high", Xiang said. There was also no sign of lending going to "very, very bad" projects or work with "very, very low efficiency".