China’s ruling Communist Party and cabinet have ordered local authorities to stop amassing “hidden” debt as part of Beijing’s bigger push to head off catastrophic financial risks.
The order was sent to municipal governments throughout the country, according to official reports of cadres meeting to study the threat.
The full text of the order has not been released but the official Hunan Daily reported on Thursday that provincial governor Xu Dazhe ordered cadres “to follow requests from the central leadership to get a clear picture of hidden local government debt as soon as possible and then make plans to address it”.
Officials in Jingzhou and Yunxi county in Hubei province and the county of Kangle in Gansu also met to examine the instructions, reports on government websites said.
Zhao Quanhou, a senior researcher with the Ministry of Finance’s Chinese Academy of Fiscal Sciences, said the debt curbs were an effort to cut leverage in the economy, listed by President Xi Jinping as the country’s overriding economic priority.