Ministry of Finance on “High Alert” Over Hidden Local Government Debt

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The vice-head of China’s Ministry of Finance has warned of the need for regulators to be on “high alert” over the hidden debt of local government.

During a speech delivered at the 2017 China Bond Forum (2017中国债券论坛) on 23 December, Zhu Guangyao said that with respect to macro-economic policy Beijing’s “active fiscal policy will remain unchanged,” and that “stable and neutral monetary policy will be preserved.”

According to Zhu the next step for macro-economic policy would be to maintain a “high-alert” with respect to the hidden debt of local government, as well as the debt levels of state-owned enterprises.

“This is a key link in resolving excessively high risk, and removing hidden systemic financial risk,” said Zhu.

Zhu also said that the deepening of supply-side structural performs should enable China to achieve full-year GDP growth of 6.8%, to once again make it the fastest growing major economy in the world.

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