Books have been manipulated in Hunan, Inner Mongolia, and Ningxia. Provincial debts could be at least five times larger than official figures. The National Audit Office released its latest report.
Beijing (AsiaNews/Agencies) – China’s National Audit Office (NAO) has found more than 15 billion yuan (US.4 billion) of undeclared debt in local governments that bypassed central government rules to fund infrastructure projects.
In its fourth quarter report, released this week, the NAO exposed debt risks for governments in five provinces that had used various means to accumulate hidden liabilities.
In Hunan for example, the city of Shaoyang borrowed a total of 7.2 billion yuan (US.1 billion) by using public infrastructure such as roads as collateral – which is prohibited.
In Baotou (Inner Mongolia), local authorities broke the rules by providing guarantees to cover borrowing worth 8.1 billion yuan (US.3 billion) for building roads and renovating shantytowns.
In Xixi, Yinchuan (Ningxia Hui), the local government earmarked 1.9 billion yuan (US0 million) from its budget to finance an urbanisation development project, which is also forbidden by the Finance Ministry.
The audit also found that two local finance bureaus, those of Hunan and Ningxia, had manipulated their books to inflate their revenues by 550 million yuan (US million) last November and March respectively.
This “hidden debt” worries economists because it goes on top of China’s overall government debt, which stood at 36.2 per cent of its GDP last year.
According to some Chinese economists, the real debt of several provinces is at least five times larger than the official figures.