No imminent risk from local govt debt: Moody’s exec

The risk from China's local government debt has been reined in to some extent and is unlikely to cause a financial crisis, the People's Daily website reported Monday, citing an interview with a senior executive at ratings agency Moody's Investors Service.

Thomas Byrne, Moody's senior vice president, said in an interview with people.com.cn that China will not suffer a financial crisis in the near future, despite the huge local debt.

In July, the IMF estimated that China's public debt, including that of central and local governments, exceeded 45 percent of the country's GDP in 2012, up from a level of below 40 percent in 2008 and closer to the international warning line of 60 percent.

Many analysts have expressed concern that China might fall into a debt crisis.

Li Youhuan, a senior economist with the Guangdong Academy of Social Sciences, said in an earlier interview with the Global Times that local government debt was the second most worrying factor facing China's economy, behind the overheating real estate market.

However, the debt-related risks will not impact the strong central government finances, as the country's current credit inflation has been well controlled, said Byrne.

In order to further control risks, the National Audit Office announced in July the launch of an official audit of nationwide public debt.

But Byrne also expressed concerns, saying that some problems urgently need to be solved, such as improving local government investment transparency.

If China could enhance the transparency and hinder credit from rapidly increasing, it would boost the country's sovereign credit rating, he noted.