Ministry of Finance to Tackle China’s Local Government Debt Risks
In a recent report released by the Ministry of Finance, the implementation of China’s fiscal policy in the first half of 2023 was assessed. The report emphasized the need to prevent and resolve the risk of local government debt in the second half of the year.
The ministry proposed the consolidation of local and departmental responsibilities to ensure effective implementation of the fiscal policies. The report stressed the importance of the requirement that “provinces take overall responsibility, and local party committees and governments at all levels take their own responsibilities”.
To address the issue of local government debt, the ministry will closely supervise and urge local governments to coordinate various funds, assets, resources, and supporting policies. Efforts will be focused on cities and counties to resolve existing hidden debts, optimize term structures, reduce interest burdens, and gradually ease debt risks.
The report also highlighted the need for cross-departmental joint supervision to maintain a high-pressure situation. Regular supervision and evaluation will be strengthened, and new hidden debts will be resolutely investigated and dealt with. Those responsible for such behavior will be held accountable for their actions. By reversing investigation responsibilities, the aim is to prevent new debts while reducing existing ones.
Furthermore, the Ministry of Finance aims to steadily promote the supervision of local government debt consolidation. The establishment of a unified long-term regulatory framework will be pursued to ensure effective management of local government debts.
The report’s proposals come as part of the broader effort by the Chinese government to address debt risks and promote sustainable economic development.
Source: Financial Associated Press