China's Debt_ China just introduced a debt ceiling for local government borrowing, already at a 'high risk' level

BUSINESS INSIDER
AUSTRALIA

David Scutt Aug 31 2015, 3:53 PM

China just introduced a debt ceiling for local government borrowing, already at a 'high risk' level


Getty

For the first time in China’s modern history, the National People’s Congress (NPC) Standing Committee has introduced a debt ceiling for local government debt, setting it at 16 trillion yuan ($2.5 trillion) for 2015 according to a report in the state-run People’s Daily newspaper.

The decision, announced over the weekend, will keep borrowing within local governments’ ability to repay, said the newspaper.

The ceiling covers all provinces, municipalities and autonomous regions within the country according to the report.

Lou Jiwei, China’s minister of finance, stipulated that the ruling was designed to ensure local government debts never exceed 100% of their wealth-generating capability, as measured by their individual fiscal revenues.

Lou noted that with local government debt likely to hit 16 trillion yuan by year end, the ratio would sit around 86%, something the NPC already deems to be a “high risk level”.

According to the report, local government debt has grown rapidly in recent years, jumping by over 40% in a little over two years.

Liu Jianwen, a professor of finance and law at Peking University, told the People’s Daily that “the quota system will force local governments to become more responsible for their spending and fundraising activities”.

Given the rapid increase of indebtedness it suggests that local government borrowing could be stifled in the years ahead if the debt ceiling is enforced by the NPC.

It may also weigh on infrastructure expenditure, and as a consequence overall economic growth.

It’s an unpalatable balancing act, but one that had to be addressed given the explosion in levels of indebtedness – both in the private and public sectors – seen in recent years.



READ MORE: http://www.businessinsider.com.au/china-just-introduced-a-debt-ceiling-for-local-government-borrowing-already-at-a-high-risk-level-2015-8

Follow Business Insider Australia on Facebook, Twitter, and LinkedIn

***

Chân thành cám ơn Quý Anh Chị ghé thăm "conbenho Nguyễn Hoài Trang Blog".
Xin được lắng nghe ý kiến chia sẻ của Quý Anh Chị trực tiếp tại Diễn Đàn Paltalk: 1Latdo Tapdoan Vietgian CSVN Phanquoc Bannuoc . 
Kính chúc Sức Khỏe Quý Anh Chị . 



conbenho
Tiểu Muội quantu
Nguyễn Hoài Trang
02092015
___________
Cộng sản Việt Nam là TỘI ÁC
Bao che, dung dưỡng TỘI ÁC là ĐỒNG LÕA với TỘI ÁC