China on course to contain local government debt risks

China has introduced a series of administrative measures and established a full-coverage and all-round risk prevention and control system in recent years to ensure that local government debt management is increasingly standardized.

With the implementation of the new Budget Law in 2015 and relevant regulations, China has set up a number of mechanisms concerning local government debt management, including debt quota management, budget management, early risk warning, emergency disposal, and debt replacement. It has also taken timely measures to strengthen local government debt management by stopping local governments from borrowing in disguised forms, such as government service procurement and cooperation between government and social investors.

In recent years, China has made continuous progress in local government debt management following the principles of legalization, standardization and market orientation.