The long-standing issue of local debt, which has not been far from the public’s mind, has recently caused a great uproar. Recently, an official think tank in Southwest China’s Guizhou province issued a statement after researching the local debt situation in many cities and counties in the province, stating that the province was “constrained by limited financial resources, and the progress of debt reduction is extremely difficult. Relying solely on its own capabilities is no longer effective.”
To what extent this article represents the local government’s position is unknown, but such a statement is unprecedented. The public has been discussing this issue. At the beginning of this year, when the Ministry of Finance replied to several proposals from members of the National Committee of the Chinese People’s Political Consultative Conference last year, it stated that it should stably reduce the outstanding implicit debt; adhere to the principle that there should be no bailouts from the central government.” Obviously, this principle still applies today. On the issue of local debt, financial discipline should not be relaxed, nor can it be.
