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The nationwide emergence of the spokesperson system at the local government level will establish a standard procedure for the release of government information and has demonstrated China's determination to increase transparency in its government operations.

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  • Successive spokesmen of Municipal Government :
    Jiao Yang
  • Successive spokesmen of Municipal Government :
    Chen Qiwei
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Shanghai denies city has debt problems
07.19.2011

The Shanghai government has denied media reports that one of its investment vehicles had serious debt problems and was unable to repay bank loans since earlier this month.

All the government-controlled investment vehicles are running well and the financial sheets of Shanghai Chengtou, a company owned by the municipal government which focuses on real estate and highways development, are "very healthy," city spokesman Chen Qiwei told a press conference yesterday.

His remarks were in response to a story in yesterday's Hong Kong Economic Journal which said that a city government investment firm had stopped paying loans and had asked for an extension. The report cited unidentified people.

According to the report, the firm had put up government buildings and city highways as collateral so it could change liquidity loans, which have a shorter payback period, to longer-term fixed asset loans.

However, as government buildings and city highways can not be traded in markets, its ability to return the money was in question, the newspaper said, without naming the company or the size of the debt.

It added that the unnamed company had issued bonds and received bank loans in 2008 and 2009 after China introduced a 4 trillion yuan (US$618 billion) stimulus package to spur the economy amid the global financial crisis.

Some of the loans are close to maturity this year, the report said.

Zhou Daohong, speaking for Shanghai Chengtou, told Sina.com that it was not the firm mentioned in the Hong Kong report. Chengtou had always paid its debts and interest as required, Zhou said.

Shares in Shanghai Chengtou Holding Co, a listed firm under Shanghai Chengtou, shed 1.71 percent to close at 8.06 yuan yesterday.

Banks in the Chinese mainland stock markets have been falling for weeks on investor concern over hidden liability risks from local government financing vehicles.

China's local governments are in 10.7 trillion yuan of debt, the National Audit Office said on Monday.

Nearly half the debt was made through financing vehicles.

Bank loans were the source of 80 percent of debts, topping 8.5 trillion yuan as of December 31 last year.

Caixin Magazine reported that a government investment firm in Yunnan Province had filed a notice to local banks saying it was only able to pay the interest on its debts.