Local govts not allowed to raise new 'hidden' debt

China will not allow new local government debt to be raised in "hidden ways", nor will it ease the controls on government debt financing despite the heavy fiscal pressure the country faces this year, Minister of Finance Liu Kun said on Thursday.

China has decided to make unprecedented cuts to taxes and corporate pension payments and increase investment in such fields as agriculture, infrastructure, technological innovation and social causes, officials said. That will predictably lead to heavy fiscal pressure as a result of reduced fiscal income and increasing expenditures.

But any new local government debts raised in "hidden ways" will be strictly prohibited, Liu said at a news conference during the ongoing second session of the 13th National People's Congress. The central government will not provide any bailout for local debt defaults, he said.