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Two Sessions 2021
EconomyChina Economy

China’s debt-laden local governments urged not to ‘blindly expand’ post-coronavirus infrastructure projects

  • China’s top leadership has issued a warning about the ‘heavy debt burden’ of some local governments, saying greater monitoring is needed
  • Total government debt totalled 46.55 trillion yuan (US$7.1 trillion) at the end of 2020, including 25.66 trillion yuan owed by local authorities

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China’s local governments have been told to refrain from recklessly expanding infrastructure projects. Photo: Xinhua
Frank Tangin Beijing

China’s top legislature has urged the nation’s cash-strapped regional governments not to “blindly expand” infrastructure projects due to concern about mounting financial risks stemming from trillions of yuan worth of coronavirus stimulus last year.

“Some regional governments are facing heavy debt burdens, while there were still new increases of implicit liabilities,” the financial and economic affairs committee of the National People’s Congress (NPC) said during its review of budget implementation and planning.

“[We] must push for the compilation and publishing of local government balance sheets.”

The committee also identified a number of related issues, including the effect of insufficient fiscal revenue on operations and growing pressure on the pension system, according to details of the review published by the official Xinhua News Agency on Tuesday.

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Government debt in China totalled 46.55 trillion yuan (US$7.1 trillion) at the end of 2020, including 20.89 trillion owed by the central government and 25.66 trillion yuan by local authorities.

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