The Minister of Finance Lou Jiwei said in a recent media interview that the local government debt remains controllable with slowing down pace of growth, but some places are indeed haunted by serious problems. Currently the ministry tries to strengthen the communication with local governments, and the National Audit Office is also conducting an debt audit. Regulating the issue of bonds is the first thing to prevent and resolve local government debt risks. Local government debt can only be used to support capital construction; spending borrowed money on current expenditures will be a slippery slope. In addition, some distinction can be made between different types of debt. Public welfare debt can be repaid with public finance revenues, while the debt raised through local financing vehicles can only be paid with income-generating assets.
According to him, even under the pressure due to slowed growth of fiscal revenues, the spending on peoplel’s livelihood remains a priority. Other important items include environmentally friendly areas, alternative energy, and railways.