Beijing vows to rein in local debt
Policymakers will also keep monetary measures stable amid the push for financial reforms
The mainland's top planning agency pledged yesterday to curb local government debt while the central bank said it would keep monetary policy stable this year as it pushes ahead with financial reforms.
The promises come as policymakers look to put the economy on a more sustainable footing.
The National Development and Reform Commission said it would curb the "disorderly expansion" after the National Audit Office reported on Monday that local governments had run up total debt of 17.9 trillion yuan (HK$22.7 trillion) by the end of June.
Leaders are looking for steady growth in the economy as they push through one of the country's most ambitious reform agendas, aiming to transform the economy into one driven by consumers rather than investment and exports.
But policymakers face a series of challenges, including weak demand for mainland-made goods overseas, industrial overcapacity, structural problems and the rise of debt at all government levels.
The NDRC said that, overall, debt levels were under control, but it would take measures to keep debt down, including allowing local government financial companies to issue bonds to replace some existing short-term debt that has high interest rates, and encouraging the flow of private capital into infrastructure projects. It will also step up spot checks on local government financing vehicles.
In a New Year message on the central bank's website, People's Bank of China governor Zhou Xiaochuan said monetary policy would be more pre-emptive and co-ordinated this year.
"We will vigorously promote financial reform, accelerate financial innovation to maintain financial stability, improve financial services and management to support the economic development and adjust the economic structure," Zhou said.
His comments supplement earlier ones from the central bank after its fourth-quarter monetary policy committee meeting that the mainland will achieve reasonable growth in credit and social financing while keeping appropriate liquidity to support growth.
The PBOC has not found its part in the reform process easy, having tried to reduce the cash in the system to rein in bank lending in a move that caused credit crunches in June and last month.
It announced rules yesterday for financial institutions issuing asset-backed securities, saying they must keep at least 5 per cent of the securities themselves to prevent risk.
It also said that as part of its continuing interest-rate reforms, qualified banks would be able to allow their branches to issue certificates of deposits in future.