(Yicai Global) March 28 -- China's local governments at all levels have accelerated the establishment of a sound and standard debt financing mechanism to prevent and tackle financial risks, said a senior official of the ministry of finance.
The local governments have achieved remarkable results marked by a 0.5 percentage point year-on-year drop in government debt ratio last year, the ministry said on its website, since the implementation of the budget law of the People's Republic of China and the opinions of the State Council on strengthening the administration of local government debts.
In light of government debt risks, China's local government debt was CNY16.47 trillion (USD2.61 trillion), and the debt ratio (balance of indebtedness/comprehensive financial resource) was 76.5 percent as of the end of last year, lower than the internationally adopted warning limits, the official revealed.
Together with the central government debt of CNY13.48 trillion under the budget management, China's government debt totaled CNY29.95 trillion. Based on the CNY82.71 trillion preliminary calculated GDP last year as announced by the National Bureau of Statistics, the government debt ratio (balance of indebtedness/GDP) of China was 36.2 percent, 0.5 percentage points lower than that of the previous year, below the average of major market economy countries and emerging market economies, the official said. Therefore, any potential risk can be contained, he added.