Some of China’s local governments have borrowed more money off-the-books than the total legal amount the Ministry of Finance allows them to borrow through official channels, Caixin reported a senior lawmaker as saying.
Since the new budget law took effect in 2015, taking on such debt violates the rule that local governments can only raise money by issuing bonds.
“The size of some local governments’ hidden debt is rather big and the rate of increase is quite fast. The value of the hidden debt of some local governments has exceeded the legal quota of their official debt,” said Zhu Mingchun, a vice chairman of the committee’s Budgetary Affairs Commission at a press conference on Sunday. “The risks of some regions are quite outstanding.”
By the end of 2018, outstanding official local government debt totaled RMB 18.39 trillion ($2.73 trillion), within a quota of RMB 20.1 trillion, while initial figures obtained by the authorities showed the hidden debt in most provinces to be 1.5 to 2 times larger than their reported budgets.