Local government debt needs clarification

China should clarify the specifications of local government debt and release the information on the total amount and structure of the debt to the public, said Ma Weihua, former president of China Merchants Bank and a member of the National Committee of the Chinese People's Political Consultative Conference.[Special coverage]

In his proposal to the CPPCC this year, Ma said commercial banks have met problems when local governments clear their debt. For instance, the government may not announce the total amount of local government debt or made clear the standards for the classification of different types of debt.

"The central government needs to clarify the proportion of debt that the local government is responsible for and the procedure on how to handle this kind of debt," said Ma, who now serves as the president of Hong Kong-based Wing Lung Bank.

For the debt that the government has no responsibility to repay, he suggested the local government inject quality assets to the projects that have insufficient operation income to increase their profitability.

He also called for the government to unveil the policy on how to continue extending loans during the transition period as soon as possible and announce the list of on-going projects that are allowed to continue borrowing via local government financing vehicles.