Chinese Finance Minister: "Focus on Managing Local Bond Risks in the Second Half of the Year"

Ryu Kun, China's Minister of Finance, stated that the economic policy for the second half of this year will focus on strengthening soundness, including managing local government bond risks.

On the 4th, Minister Ryu announced through the '2022 Central Government Final Accounts Report' posted on the National People's Congress website, "In the second half of this year, we will focus on strengthening fiscal soundness and preventing risks related to local government bonds."

Chinese economic media Yicai Jingji reported, "Concerns about the debt risks and repayment pressures of local governments in China have recently increased," adding, "Minister Ryu mentioned the effective prevention and resolution of local government debt risks as one of the six major fiscal tasks for the second half of this year."

[Image source=Yonhap News]

He explained, "To address the hidden debt risks of local governments, a long-term mechanism must be established," and urged, "Provincial-level governments should strengthen the management of cities and counties and work to reduce debt risks." He also emphasized, "Budget constraints for local governments and management of government investment projects should be strengthened, and fiscal burden assessments should be conducted to proceed with project construction according to capacity."

Yicai Jingji referred to 'hidden debt' as "debt directly borrowed beyond the statutory government debt limit or debt illegally guaranteed," citing a report from the China National Audit Office (CNAO), which mentioned that about 49 regions illegally increased hidden debt by 41.516 billion yuan (approximately 7.4654 trillion KRW) through financing state-owned enterprises.

Additionally, according to the National Audit Office, 20 regions were found to have falsely reported revenues from special bond projects and underreported expenses, resulting in the issuance of special bonds worth 19.821 billion yuan. Five regions falsely reported the expenditure status of 33 special bond projects, and as of the end of last year, the unused balance reached 6.027 billion yuan.

Furthermore, there was a willingness to improve preferential tax and fee policies. While timely support will be provided to necessary industries, they will also monitor whether any parts are operating illegally.

The report emphasized, "We will improve tax and fee preferential policies to support the development of private enterprises, individual industries, and commercial households," while also stressing, "We will continue to rectify illegal claims by enterprises."

This content was produced with the assistance of AI translation services.