Chinese local government debt 'out of control'

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Financial Times
Breaking news
Tuesday April 16 2013

Breaking News
China local authority debt 'out of control'
A senior Chinese auditor has warned that local government debt is "out of control" and could spark a bigger financial crisis than the US housing market crash.
Zhang Ke, head of leading Chinese accounting firm ShineWing, said he had all but stopped signing off on bond sales by local governments as a result of his concerns.
"We audited some local government bond issues and found them very dangerous, so we pulled out," Mr Zhang said in an interview. "Most don't have strong debt servicing abilities. Things could become very serious."
The International Monetary Fund, rating agencies and investment banks have all raised concerns about Chinese government debt. But it is rare for a figure as established in the Chinese financial industry as Mr Zhang, who serves as vice-head of China's accounting association, to make such stark comments.

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