BEIJING: China is confident of fully forestalling systemic risks, the country’s finance minister said on Wednesday, voicing firm stance on debt control.
Beijing should focus its debt-reduction efforts on state-owned firms and local governments, but the biggest loser to date of the deleveraging process has been the private sector, a Chinese ratings agency said.
The country’s debt-to-GDP ratio has decreased to 36.2 per cent by the end of 2017 from 36.7 per cent in 2016, far below the international alert line of 60 per cent, Finance Minister Xiao Jie said at a press conference on the sidelines of the annual parliamentary session.
The ratio is also relatively low compared with the levels of major economies and emerging countries, said Xiao, who expects “no significant change” in the ratio in coming years.
By the end of last year, the combined bill of central and local governments in China stood at 29.95 trillion yuan ($4.75 trillion), of which 16.47 trillion yuan belonged to the local governments, according to the minister.
The Chinese government pays high attention to the management of government debt and is firm in cracking down on irregularities in financing activities, he said.
With a new budget law and a number of follow-up measures in place, the government has established a closed-loop system that covers quota management, budget management, risk early warning, emergency response and daily oversight.
Nearly 100 people had been held responsible for misconduct and irregularities related to local government debt in 2017 as the country strengthens efforts to defuse financial risks, according to Xiao.