China looks to clean up local government debts

China decided on Wednesday to help local governments pay off bonds and loans by approving more short-term debt issues, The Wall Street Journal reported, citing a person with direct knowledge of the matter. Economists estimate local governments may have borrowed as much as US$5 trillion in recent years to fund projects and keep the economy humming as Beijing scaled back the stimulus efforts it had undertaken following the global financial crisis. This move comes just weeks before a widely anticipated national audit of local government debt designed to uncover just how much banks and investors have lent to local governments.