China names and shames 8 authorities after warning struggling regions to curb hidden debt
Notices from top legislature and finance ministry come with debt management under the microscope amid scramble to achieve economic growth targets for 2024
China’s finance ministry named and shamed eight local authorities on Thursday for adding implicit debt, in the latest move to hold local officials accountable for vanity projects and irresponsible borrowings.
In an online statement, the Ministry of Finance said the move was to “enhance fiscal disciplines and “serve as a warning”, as the world’s second-largest economy is at an important juncture of battling a daunting debt mountain while staving off financial risks.
The biggest sum of implicit debt was found in a bonded zone of Tianjin, a heavily indebted municipality 100km (62 miles) east of Beijing, where local authorities borrowed 14.7 billion yuan (US$2.08 billion) from affiliated enterprises between June 2018 and May 2023 to help repay the debt of another state-owned enterprise.
It resulted in a 7.4 billion yuan net increase in implicit debt, according to the results of a finance ministry investigation.
A week earlier, China’s top legislature also issued a new order to curb the rise of hidden debts across the country, as some local authorities have launched last-ditch efforts to meet this year’s economic growth target.
In a local-debt-supervision report delivered last week, Xu Hongcai, head of the National People’s Congress (NPC)’s budgetary affairs body, revealed that a number of local governments “were not strict enough in implementing budgetary and debt-management policies”.
