Nov. 14 (Bloomberg) -- China’s local government debt may be almost 3 trillion yuan ($473 billion) higher than the figure given by the nation’s audit office, if loans taken out by township governments are included, the Economic Observer reported, citing research from an independent institute.
Borrowing by townships, an administrative tier of government below provinces, cities and counties, wasn’t included in a report by the National Audit Office in June that put debt from those three levels at 10.7 trillion yuan, the weekly newspaper said in a report on its website dated Nov. 12, citing Beijing Fost Economic Consulting Company.
Local authorities in China, barred from directly selling bonds or taking bank loans, set up at least 6,576 companies to raise money for roads, sewage plants and subways, according to the audit office’s report. Government officials have sought to allay concerns that the debt will saddle banks with soured loans and derail economic growth.
The audit, called for by the State Council, or Cabinet, covered the investment vehicles of provincial, city, and county- level governments and didn’t mention debt carried by township authorities.
Hou Kai, a spokesman for the Beijing-based audit office, couldn’t be reached to comment on the report.
Duyang, a township in Yunfu city in the southern province of Guangdong, has more than 200 million yuan worth of debt while its annual fiscal revenue is only 500,000 yuan, the Beijing- based Economic Observer said, citing Wu Zhanjiang, a deputy head of the township government.
Some townships in Yunfu can’t even afford to pay the phone bills of some of their offices and some have failed to pay some workers’ salaries, the newspaper said.
--Victoria Ruan. Editors: Nerys Avery, Sunil Jagtiani
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