China to Step up Local Gov't Debt Management

China will take further measures to enhance its management of the country's local government debt to prevent and resolve potential fiscal and financial risks, Finance Minister Xie Xuren said Tuesday.

Local authorities are required to pay their debts properly and ensure funding for projects that are still under construction, especially key projects, Xie said at a press conference held on the sidelines of the country's annual parliamentary session.

Xie pledged to continue clearing-up and regulating local financing vehicles by enhancing management over financing platforms and the credit conditions of fund-raising institutions in the banking sector.

Irregularities in government guarantees of local debt should be firmly prohibited, Xie said.

The government is working to establish or improve the management system on local government debt and an early warning system for potential risks, he added.

Local government debts had risen to 10.72 trillion yuan (US$1.7 trillion) by the end of 2010, accounting for about 17 percent of China's gross domestic product that year, according to data released by the National Audit Office.

China's government debt is "safe and under control," and the government is able to pay it off, Yang Kaisheng, president of the Industrial and Commercial Bank of China, said at a separate press conference Tuesday afternoon.