China is confident it can fend off financial system risks and will continue with tough steps to curb illegal borrowing by local governments, a senior financial official said yesterday..
China is confident it can fend off financial system risks and will continue with tough steps to curb illegal borrowing by local governments, a senior financial official said yesterday.
Finance Minister Xiao Jie told a briefing that the ratio of government debt to annual economic output was 36.2 per cent at the end of last year, slightly down on the 36.7 per cent from a year earlier.
This is safely below the 60 per cent international « warning » level, he said, and lower than other major economies and some emerging market countries.
China’s rapid debt build-up in recent years has triggered warnings from global observers. Last year, rating agencies Standard & Poor’s and Moody’s cut China’s sovereign credit ratings on the back of worries about borrowing.
A report by International Monetary Fund economists last December said China should include local government financing vehicles, public-private partnerships and government-guided funds in tallying local government debt to give a fuller picture of the extent of the debt overhang.
Mr Xiao sought to diffuse those worries yesterday by highlighting measures to manage government debt. He noted that local government debt issuance is the only legal means of borrowing.
