China's debt risk 'is under control'

17 August 2011

China's debt risk is under control, with many banks in the country prevented from lending money to a number of local governments, it has been claimed.

In comments published in the People's Daily, Liu Mingkang, the nation's top bank regulator, noted Beijing's attempts to keep on top of Chinese government debt are going to plan, Reuters reports.

The industry figure explained risks from more than $1 trillion in loans are stable, while confirming local authorities that do not meet strict requirements have been barred from borrowing large sums from the country's banks.

He noted: "The overhaul of loans to local government financing vehicles and work done to moderate risks is progressing smoothly. The risks are under control."

His comments come after Moody's Investors Service - whose parent company Moody's Corporation employs more than 4,500 people worldwide - recently suggested banks' exposure to debt from these local authorities is greater than first thought.

By Tony Aynsley

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