China plans steps to unearth hidden debt

Minister: Innovative financial tools, swaps to help tackle growing problem

Local governments will be urged to leverage financial resources for reducing "hidden debt" and make use of market-oriented financial instruments for debt swaps, a senior government official said on Thursday.

In a signed article, Finance Minister Liu Kun said it was imperative to bring down the contingent liabilities of local governments. The minister's comments also marks a change in the government's perception about local government debt. The earlier stance of the ministry was on "controlling the incremental part of the hidden debt", which is usually debt borrowed by State-owned companies and local government financing vehicles, but implicitly guaranteed by the government.