Local Chinese Officials to Be Evaluated by Level Debt

Two weeks ago, China’s National Audit Office announced local government debt had gone up to 1.6-trillion dollars at the end of last year. Now, according to state media, Chinese authorities plan to hold local officials accountable. Their work performance will be evaluated according to the amount of debt their local governments have incurred.

State-run China Daily reported local officials’ political careers could be diminished if their governments had built up excessive debts during their terms in office.

The move is to restrict borrowing and control soaring local government debts that could destabilize China’s economy.

The dept is equivalent to more than a quarter of the country's GDP. It includes over one billion U.S. dollars of bank loans. According to Moody’s research and ratings agency, figures for bank loans may be underrated by half a billion U.S. dollars.

A soaring debt could force local officials to seize land to make money. According to the National Audit Office, local governments use land as collateral for borrowing. And they rely on land sales to finance their debts.