The Ministry of Finance responds to whether to replace local debt with central debt: it is necessary to study carefully

Cover news reporter Teng Han

On December 16, at a regular briefing on State Council policies held by the State Council's new office, Vice Minister of Finance Xu Hongcai responded to whether to replace local debts with central debt. At present, we do not have such an arrangement, that is, we must resolutely prevent and resolve the risk of local government debt. ”

Vice Minister of Finance Xu Hongcai (Source: Guoxin)

There are two internationally accepted debt indicators, one is from the national summary, mainly the debt ratio indicator, that is, the proportion of government debt balance to GDP, to measure the overall level of government debt. The other is the local government debt indicator, due to the imbalance in economic development between different regions, in order to ensure the equalization of basic public services in the region, the central government will implement transfer payments to the local government. Affected by the fiscal system, transfer payments and other factors, the indicator of debt level in various places cannot be divided by GDP by the debt balance, but must be compared with the comprehensive financial strength, which is generally called the debt ratio.

Xu Hongcai revealed that as of the end of 2020, the balance of local government debt was 25.66 trillion yuan, controlled within the limit approved by the National People's Congress of 28.81 trillion yuan, plus the balance of central government debt included in budget management was 20.89 trillion yuan, and the balance of national government debt was 46.55 trillion yuan, according to the 2020 GDP data released by the National Bureau of Statistics of 101.6 trillion yuan, the ratio of government debt balance to GDP, the debt ratio indicator is 45.8%, lower than the internationally accepted 60% The warning line is also lower than the level of major market economies and emerging market countries, and the risk is generally controllable.

In terms of debt ratio, the local government debt ratio at the end of 2020 was 93.6%, and the international standard was between 100% and 120%. Overall, the debt ratio of local governments in China is not high.

Xu Hongcai said that at the same time, we must see that the long-term trend of China's economy will not change, whether it is the debt ratio, or the debt ratio indicators of local governments, because the long-term trend of the economy will not change, the denominator of this indicator is growing, which also creates good conditions for us to prevent risks and implement macroeconomic regulation and control.

However, Xu Hongcai also pointed out that the prevention and resolution of local government debt risks has achieved positive results, the level of debt-related indicators is generally not high, but the risks in local areas cannot be ignored, there are still hidden debt problems, and we are also actively taking measures to prevent and resolve them. We attach great importance to the problem of local government debt risks, and will fully understand the long-term and arduous nature of the task of preventing and resolving local government debt risks, and always remain vigilant, especially to prevent risks in areas with high local risk levels, and identify key and solid work. We will do our best to fight, work hard for a long time, resolutely leave no future troubles, and firmly adhere to the bottom line of not having systemic risks.

When talking about whether to replace local debts with central debt, Xu Hongcai said, "I think this issue should be carefully studied, and it is not a simple matter. I know that some countries have done such things, the effect is not good, we do not have such an arrangement at present, that is, to resolutely prevent and resolve the risk of local government debt. ”

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