Slower growth of local govts poses 'threat to banks'

Slowing growth in local government incomes could exacerbate liquidity shortages among Chinese banks, experts said.

"Chinese banks are like a cashbox for local governments; therefore, they are not exempt from the difficulties of local governments' financial situation," said Zhao Quanhou, head of financial research at the Institute of Fiscal Sciences at the Ministry of Finance.

According to the ministry, government revenues grew 6.6 percent in the first five months, 6.1 percentage points slower than a year earlier. The growth target for 2013 is 8.5 percent.