By Zan Xin (昝馨)
Economic Observer Online
Nov 18, 2011
Translated by Song Chunling
Original Article: [Chinese]
 
Qiu Xiaohua (邱曉華), a senior researcher with the China National Offshore Oil Corporation (CNOOC) and the former head of the National Statistics Bureau (NSB) - before he was removed from the position and expelled from the party for corruption in late 2006 - told attendees at an economic conference on Nov 15 that the current problem with local government debt would not lead to an economic crisis in China. Mr. Qiu also argues that through an appropriate reduction in the holdings of state-owned assets and other methods, the government would be able to solve the problem.

On Nov 15, Qiu attended an economic forum at Renmin University and made the point that the National Audit Office's estimate of 10.7 trillion yuan in local government debt, really is a big burden, however he went on toe emphasize that "80 percent of these debts are bank loans and only 20 percent of the debts really have problems, that is on a scale of about one to two trillion yuan ... given that China is collecting ten trillion yuan in revenue each year, 2 trillion yuan in debt is not a big problem."

Qiu is very optimistic that the local debt problem can be solved. He said that the Chinese government currently holds more than 100 trillion yuan in state-owned financial assets and centrally-controlled SOE also have more than 30 trillion yuan in assets. Qiu argued that an appropriate reduction in the amount of these state holdings would be enough to solve the local debt problem.

"An appropriate reduction, wouldn't mean a change to China's ownership of the means of production, nor would it pose a threat to national financial security and will bring with it a huge boost to fical resources.

Qiu also emphasized that the local debts problem in China won't develop into something like the sovereign debt crisis that is roiling Europe and which has forced them to turn to  the rest of the world.

Instead of requiring international assistance, the "Chinese government has the ability and resources to solve China's economic problems and the government is also better at regulating and controlling the economy then it was in the past."

Links and Sources
China.org: Top Statistician Qiu Xiaohua...Sacked and Expelled