Chinese Government debt hit RMB20.7 trillion at end of June

BEIJING – China’s central and local government debt totalled RMB20.7 trillion at the end of June 2013, according to the National Audit Office. A 13-page report discloses the results of a nationwide review of Government debt, ordered by the State Council amid concerns that mounting local debt, especially that raised through opaque financing vehicles, could pose a threat to China’s financial system. Central government debt rose to RMB9.8 trillion at end-June, up from RMB9.4 trillion at the end of 2012, while local debt climbed to RMB10.9 trillion from RMB9.6 trillion six months earlier.

The report also found that contingent liabilities, including those backed by the Government, grew by nearly RMB1 trillion to RMB9.6 trillion at the end of June, two-thirds of which occurred at the local level. The report said risks from Government debt are controllable. At this year’s Central Economic Work Conference, top leaders for the first time listed containing local government debt as a major goal, indicating the central government’s concern about rapidly rising debt levels.