China vows to contain local govt debt risk

BEIJING - China pledged more proactive fiscal policy during the rest of 2017, while vowing to prevent and defuse local government debt risk as well as clamp down on illegal debt issuance, a finance official said Friday.

China will maintain the continuity and stability of its policies, focusing on advancing supply-side structural reform to ensure stable and healthy development of the economy, Liu Wei, vice-minister of finance, told a news conference.

Liu said China's local government debt risk remains generally under control and the country will tighten regulation on local government debt issuance and financing activities.

Outstanding local government debt stood at 15.86 trillion yuan (about $2.4 trillion) as of June 30, slightly higher than 15.32 trillion yuan at the end of 2016 but below this year's government-targeted ceiling of 18.82 trillion yuan.

China has unveiled a slew of measures to defuse local government debt risk, including setting debt ceilings for local governments and piloting a debt-for-bond swap program.

Liu said the government will continue to lower taxes and fees in an effort to ease corporate burdens as the ongoing deleveraging campaign and tightening financial regulation pushed up their funding costs.

The ministry expected that more than one trillion yuan of taxes and administrative fees would be reduced for enterprises this year.