Chinese state media said the performance of local governments will soon be judged by the amount of debts they incur, Reuters reported. Having borrowed a total of US$1.6 trillion (RMB9.7 trillion) as of the end of June, China’s heavily indebted local governments are considered among the biggest threats to the health of economy. Large-scale government investment has helped China’s gross domestic product expand at double-digit rates for the past three decades. But analysts say China’s economy has now hit a turning point, and domestic consumption must grow and investment fall to ensure a healthy expansion.
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