China's local governments, particularly those at county and township levels, are facing a huge financial crisis with the overall debts owed by them having exceeded 1 trillion yuan (125 billion US dollars), a political advisor said in Beijing today.
"According to 2004 figures, the debts of local governments in China totaled at least 1 trillion yuan, with half of the debts borrowed by provincial and city-level governments and the other half shared by county and township-level governments," said Feng Peien, a member of the Tenth National Committee of the Chinese People's Political Consultative Conference (CPPCC), China's top advisory body in its annual full session here.
In a speech delivered at a plenary meeting of the more than 2, 000 advisors in the Great Hall of the People on Wednesday afternoon, Feng said according to his study, the average debts owed by the township-level governments across the country now stands at 4 million yuan (500,000 dollars).
"The financial crisis faced by the local governments has reached an alarming level, which might lead to the bankruptcy of government credit and harm the social stability," Feng warned.
In an earlier interview with Xinhua, Gan Yuping, another CPPCC National Committee member, attributed the ballooning local government deficit to an unreasonable revenue-sharing system between the local and central governments, as well as the overburdening of the local governments in the payment of public welfare spendings on education, health and rural infrastructure construction.
However, some other advisors have also blamed local officials for wasting public money on dining and wining, unnecessary meetings and building of extravagant office buildings.
"The administrative cost for maintaining government operation in China had increased by 87 times in a period of 25 years from 1978 to 2003, while the governments' financial revenues only rose by 21 times during the same period," said Ren Yuling, a CPPCC National Committee member who has studied the problem for several years.
Feng, the advisor who made the speech on Wednesday, suggested that all existing local government debts be "thoroughly investigated and registered," and that a "scientific local government debts' management system" based on relevant laws and regulations be set up to "standardize local governments' borrowing. "
The borrowing of new, unreasonable debts by the local governments should be strictly banned, while those local officials who borrow illegally, fail to repay the debts as scheduled, or have caused losses of public assets should be punished according to law, Feng added.