China orders nationwide government debt audit

[CityFarmer]

China is also preparing for coming "storm"... A good news in long term, but might impact on certain sectors in short term... IMO

China orders nationwide government debt audit

BEIJING — China’s National Audit Office will conduct an audit of all government debt at the request of the State Council or Cabinet, it said in a statement yesterday, underlining concern over rising debt levels in the world’s second-biggest economy.

The audit office, responsible for overseeing state finances, made the announcement in a one-sentence item on its website, but gave no details on the audit.

http://www.todayonline.com/chinaindia/ch...debt-audit

[CityFarmer]

Base on wikipedia, China's Jiangsu province nominal GDP was 4.80 trillion yuan in 2011.

http://en.wikipedia.org/wiki/Jiangsu

Debt = 771 billion, GDP = 4800 billion, i.e. 16% of the GDP... Not too bad a number indeed...

China’s Jiangsu province calls S$159 bln bank debt manageable

BEIJING – Government debt in China’s eastern Jiangsu province is under control and at an manageable and “appropriate” level for its economy, a Chinese newspaper on Tuesday quoted a senior local official as saying.

The report in the 21st Century Business Herald contained the first public comment from an official in Jiangsu since Reuters in July reported that it may be the “standout debt risk” among China’s 31 provinces.

Tuesday’s newspaper report, citing unidentified sources, said outstanding bank loans of 752 local government financing vehicles in Jiangsu reached 770.6 billion yuan (S$159 billion) by the end of June, up 2.7 per cent from the beginning of this year.

Aside from bank loans, Jiangsu government financing vehicles have also raised a total of 576.8 billion yuan via alternative channels such as wealth management and trust products by June, according to the paper. In the first six months of 2013, local authorities borrowed 135.4 billion yuan through these channels, it said, without citing sources.

http://www.todayonline.com/business/chin...manageable

[CityFarmer]

The report has impact on China bank sector's prospect... Of course, feel free to dismiss it if in doubt...

China to complete local debt audit ahead of November meeting

BEIJING - China will this month complete an audit of local government debt to assess risks to its financial system, ahead of a Communist Party meeting in November to set economic policy, Bloomberg News reported on Friday.

China’s Finance Ministry will wrap up its first full audit in more than two years in September and release the results in October, Vice-Finance Minister Zhu Guangyao said at a briefing during the G-20 Summit in St. Petersburg, Russia.

China in July ordered a nationwide review of local government debt, which the National Audit Office said in 2011 totalled 10.7 trillion yuan (S$2.2 trillion). Former Finance Minister Xiang Huaicheng said in April the amount may be more than 20 trillion yuan, underscoring the risks President Xi Jinping’s government faces as the economy slows and it tackles the effects to the financial system of a record credit boom.

“The loans to local-government financing corporations are mainly used for infrastructure projects which have a relatively sound financial return,” Mr Zhu said.

“But indeed there are some projects, the so-called image projects, by local governments that have very little financial return and virtually no social benefits,” he added.

The audits this year may see the total volume rise “a little bit,” he said.

Local Chinese governments have also set up thousands of companies to sidestep regulations that bar them from directly borrowing from banks or selling debt. These financing vehicles were used to raise funding for construction of infrastructure such as roads and sewage systems.

The lack of transparency in local-government borrowings prompted Fitch Ratings to cut China’s long-term local currency debt rating in April.

http://www.todayonline.com/business/chin...er-meeting