China’s National Audit Office recently released the results of the debt audit of 36 provincial level governments. As of the end of 2012, these 36 governments had a debt balance that had reached 3.85 trillion yuan (US$0.63 trillion). This represents a 440 billion yuan (US$71.7 trillion) or 12.9 percent increase over the level in 2010. An official from the National Audit Office observed that the pace of current local governments’ debt growth is too high and that some regions and industries are facing a looming debt crisis.
The audit results highlighted four aspects of the debt problem. The first is the high debt growth of some provincial capital cities: 14 provincial capital cities have 18.17 billion yuan (US$2.96 billion) in overdue debt. Second is the decline in the growth of land sale revenues. Third, in some areas, the debt for highway construction has grown rapidly. Fourth, due to the cancellation of road tolls, some governments face greater pressure for debt repayment.
Source: Xinhua, June 13, 2013