China will start a nationwide audit of government debt this week as the new Communist Party leadership investigates the threats to growth and the financial system from a record credit boom.
The State Council, under Premier Li Keqiang, ordered the review, the National Audit Office said in a statement yesterday. The office suspended other projects for this “urgent” work requested on July 26 and will send staff to provinces and cities this week, People’s Daily reported yesterday on its website, citing sources it didn’t identify.
The first full audit in more than two years underscores the International Monetary Fund’s concern about risks to the economy from borrowing by local governments and an expansion of non-traditional sources of credit. The new leadership oversaw a showdown with state-owned lenders last month as the People’s Bank of China engineered a cash squeeze to pressure banks to better manage their operations.