China's debts 'can be controlled'

12 July 2011

The central bank in China has claimed the risks linked to local government debts can be controlled.

A statement from the People's Bank of China noted the dangers of loans to regional finance platforms are not too great that they cannot be reigned in, AFP reports.

The announcement has arrived amid mounting fears that a flurry of bad loans could be on the cards.

"Someone has estimated the debts of local government financing vehicles totalled 14 trillion yuan ($2.16 trillion), but the methodology and conclusion of the estimates are both wrong," the release went on to point out.

According to the bank - which came into being in 1948 following the consolidation of the Huabei Bank, the Beihai Bank and the Xibei Farmer Bank - there is only a small portion of local government-funded projects that would not be able to come up with the revenue for principal payments and interests.

By Gary Cooper

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