China's National Audit Office (NAO) recently issued a report on
the debt held by the Central Government. The report not only
increased China's economic transparency, but has also made it clear
whether or not there are risks on governments defaulting on any
The NAO's statistics shows that China's government debts are not
serious enough to trigger panic in the market, as they are yet to
cross the warning line, meaning that they are still
During August and September 2013, 54,400 auditors around the
country conducted a detailed survey of government debts from the
Central Government level all the way down to the community level.
The auditing results showed that China's government debts are
mainly from road and bridge building, urban construction,
affordable housing, as well as other economic and social
development programs. This differs from some countries' government
debts, which are mainly consumption expenditures. More importantly,
most of China's government debt is backed up by assets and
The NAO performed an analysis of China's government debts held
at the end of 2012. The result of the analysis shows that all the
risk indexes are under control in accordance with international
Making the government's debt situation clear and transparent to
the public shows the government's sense of responsibility and its
resolve in sticking to the truth. Moreover, by doing so, the
government will find it easier to make scientific judgments and
prevent debt risks.
But the NAO's report also shows that local governments' debts
are much higher than in the auditing result of June 2011.
Particularly, the debts local governments are liable to pay off is
increasing fast, up by 20 percent every year on average, far higher
than the growth rate of the country's GDP. This means the
government must implement effective control over government debts
and cannot let the debts increase freely.