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The overall risk of China"s government debt is under control and the momentum of steady economic growth is being maintained, according to the country"s top auditor.

The National Audit Office (NAO) said in a press release that mechanisms such as quota management, budget management, risk disposal and regular supervision are being improved, and the momentum of government debt growth has been effectively controlled.

The Chinese government has always attached great importance to the management of government debt, and has established a standardized borrowing and financing system for local governments, the press release said.

NAO submitted its audit report on June 23 to the top legislature on the implementation of last year"s central budget.

The current audit, which focused on the 2016 situation, reveals that since 2015, following standards to regulate channels for local government borrowing, local government bonds have become the major channel of local borrowings, and the management of borrowing, lending and repayment is being increasingly standardized, with its structure continuously optimized.

Using a problem-oriented approach, NAO selected and audited cities and counties in 16 provinces where government debts increased considerably.

Although there was an 87 percent growth in debt balance that the local governments have committed to repay with public funds, and some counties and the western region with comparatively smaller debt balances in previous years saw their debt balances more than doubled, the average government debt ratio (the debt balance to be repaid with public funds by government divided by the comprehensive financial resources of the same government) in these regions reached 70 percent. Compared with the government debt ratio of other major economies, this is still relatively low, the press release said.

A large part of the newly increased debt took shape as local government financing vehicles continued to implement loan contracts signed in previous years or renewed contracts in accordance with the framework agreements since the implementation of the new Budget Law.

In addition, all those debts have been used for projects to develop social undertakings and improve people"s livelihood and have formed effective assets, which help the sustainable development of local society and economy. The Chinese government has established a normal local government debt monitoring mechanism, and has strengthened accountability over irregular borrowings, the press release said.

Most of the problems revealed by audit have been rectified and the rectification results have been announced to the public, and those held accountable have received severe punishments.

Audit findings in recent years show that relevant departments and local governments have conscientiously adhered to the general work guideline of making progress while maintaining stability.

They have strengthened efforts in streamlining administration and delegating more powers to lower-level governments.

In addition, they have accelerated the shift of economic mode and adjustment of economic structure, speeded up the revitalization of idle funds and coordinated use of financial resources, promoted supply-side reform and implementation of the tasks of “cutting overcapacity, reducing excess inventory, deleveraging, lowering costs, and strengthening areas of weakness”, and steadily improved public services and capacity of safeguarding people"s livelihood.

With the good momentum for growth, progress has been achieved and stability ensured in economic development, according to the press release.

Audit results of State-owned enterprises (SOEs) show that the management of their assets and SOE reform are being further deepened, transformation and upgrading of relevant SOEs are being accelerated and industrial layout is being optimized.

The SOEs have been increasing income and decreasing expenditure, reducing costs and enhancing performance, promoting the disposal of inefficient assets, with their competitiveness and strength remarkably enhanced.

The inflated revenues 200.16 billion yuan and profits of 20.295 billion yuan for 18 SOEs revealed in the audit report, were accumulated over the years, accounting for 0.8 percent and 1.7 percent respectively of their revenues and profits for the same period.


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