Moody's warns risk of ballooning debt from China's local govts

FXstreet.com (Bali) - According to Moody's credit agency, China's local government debt poses risks for the stability of its central government, noting that local government debt and contingent liabilities are now much higher than what National Audit Office (NAO) had reported in its first audit in June 2011.

Moody's adds the following: "The NAO report, released on Dec 30, 2013, was a credit negative development though whether the new figures reflected more thorough accounting procedures or an actual sharp rise in debt, or both Moody’s report concludes that direct debt had grown beyond the capacity of many local governments to service it. The central Chinese government may need to provide additional fiscal resources to local governments to bolster their finances and debt-repayment capacity."