Only six Chinese city governments out of nearly 300 in transparency survey reveal debt levels

Only six Chinese city governments among nearly 300 featured in a survey about transparency actually disclosed their debts last year, while only half of the municipalities and provincial capitals revealed their unused budget funds, a new study shows.

The research showed that 18 municipalities and provincial capitals had unused funds totalling 23.5 billion yuan (HK$29 billion) for the 2014 fiscal year.

Publication of this year's city government fiscal transparency research report, carried out by Beijing's Tsinghua University, comes amid concerns about local government debt exposure, as well as the growing challenges to meet fiscal revenue targets.

The central government recently stepped up its efforts to recall fiscal money not in use so that it can be redirected to higher priority projects.

The new report, prepared by the university's research centre of public economy, finance and management, found that only Beijing, Guangzhou, Shanghai, Tianjin, Ningbo and Xiamen gave details of how they spent their debt.

According to figures released by the Chinese Academy of Social Sciences, local governments on the mainland were 56 trillion yuan in debt in 2013. Governments of all levels collectively had 111.9 trillion yuan in assets by 2013. However, neither Beijing nor Shanghai disclosed their fiscal year-end unused funds.

China Economic Weekly, a magazine affiliated with People's Daily, the Communist Party's flagship mouthpiece, published the names of the 18 municipalities and provincial capitals that reported unused funds of 23.5 billion yuan in fiscal 2014.

Beijing ranked first in fiscal transparency, followed closely by Guangzhou and Shanghai.

Fiscal transparency was a vital part of fiscal and taxation reform and some cities did better than others, said Yu Qiao, a professor at Tsinghua's school of public policy and management who headed the study.

Fiscal transparency had improved over the years, and city governments in the coastal provinces and municipalities directly under the central government performed better than others, Yu said.

The latest report for the first time reviewed the debt of county-level governments, which was worse than that of the municipal governments.

"It is understandable that local governments are unwilling to release the details because it would be very difficult for them to borrow money again," Yu said.

Cities use their own financial vehicles to fund infrastructure projects or welfare budgets. When fiscal income cannot cover the projects, local governments have to look elsewhere to borrow money.

Most local governments used local government financing vehicles to borrow money on their behalf, but municipal governments did not release details about these entities, the report said.