China’s finance minister on Tuesday reiterated confidence in controlling debt risks despite some irregularities in local governments’ financing activities.
“China’s government debt risks are generally within control,” Finance Minister Xiao Jie said at a press conference on the sidelines of the annual parliamentary session.
By the end of last year, combined debt of central and local governments in China stood at 27.33 trillion yuan (about 3.96 trillion U.S. dollars), with the debt-to-GDP ratio at around 36.7 percent, Xiao said, adding there won’t be big changes in the ratio this year.
Compared to international levels, the relatively low ratio allows room for the government to further raise debt, Xiao noted.
Acknowledging the existence of illegal debt-raising practices by some local governments, the minister vowed to take multiple steps to contain debt growth.
To rein in rising debt risks, China overhauled the management of government bonds in 2014, streamlining fund-raising channels for local authorities while putting a cap on annual bond issues.
In November last year, China floated a four-grade emergency plan for local government debt risks, a precautionary arrangement for “fiscal re-balancing” on the part of local government.