(Yicai Global) Dec. 17 -- China’s local governments have a relatively low debt ratio but in some parts of the country there are still risks that cannot be neglected, according to the vice finance minister.

Measures are being taken to prevent and solve hidden debt problems, Xu Hongcai said at a press conference yesterday. China’s steady long-term economic growth will not change, creating a positive environment for risk prevention and macro-control, he said.

China pays much attention to local government debt risks as it knows avoiding and resolving them is tough and time-consuming, Xu said, adding that China is always vigilant, preparing for possible issues in some high-risk regions and holds firmly to the bottom line of no systemic risks.

Local government debt stood at CNY25.66 trillion (USD402.8 billion) at the end of last year, within the CNY28.81 trillion limit approved by the National People’s Congress, Xu noted. Central government debt was CNY20.89 trillion, also within limit, he said, adding that China’s total debt reached CNY46.55 trillion.

Xu said there are two international debt indicators. The first is the debt ratio, which aims to indicates local government debt risk. It is the result of the debt balance divided by comprehensive financial resources including the general public budget and government fund budget, which consists of revenue and central fund transfers.

China’s local government debt ratio was 93.6 percent last year, lower than the international standard of between 100 percent and 120 percent, he said.

The second indicator is the proportion of total national debt to gross domestic product, which is used to calculate the overall debt level, Xu said. In China, it was 45.8 percent in 2020, lower than the international red line of 60 percent. It was also below the proportion of major and emerging market-economy countries.

Editor: Futura Costaglione