BEIJING: The Chinese Central Government has gone into overdrive to restrain the damaging impact of local government debt expenditures.
The Beijing Review reports that, "If you ask China watchers to list threats to the country's economy, you would probably get this one item on everyone's list—hefty local government debt. China released the results of a long-awaited nationwide audit on government debts in an attempt to ease mounting market concerns over the amount of debt and its possible impact."
Local governments in China have witnessed President Barack Obama escape the damaging effects of massive debt, and they hope to emulate the Obama Way in their country. And when matters become more serious, local oficials plan to launch an income equality campaign to stir public opinion in their favor.
According to the Beijing Review, "Local governments' direct debts—debt that will be repaid by the government's fiscal revenue—reached 10.9 trillion yuan ($1.79 trillion) by the end of June 2013, with the government holding another 7 trillion yuan ($1.16 trillion) in contingent debts, according to the National Audit Office (NAO) on December 30, 2013. The contingent debt includes debt for which local governments issued official guarantees (2.7 trillion yuan, or $450 billion) and debt with implicit government guarantees (4.3 trillion yuan, or $710 billion). China's local government debt and contingent liabilities grew 67 percent from a previous audit result at the end of 2010, which calculated it to be 10.7 trillion yuan ($1.77 trillion) ."
Meanwhile, local officials in the province of Wuhan have appointed former Chicago Mayor Richard Daley as a consultant on debt issues.
To read the entire article from Beijing Review, link here: To learn more about Daley's special relationship with Wuhan, link here: