Be prepared for the next great transfer of wealth. Buy physical silver and storable food.
investmentwatchblog.com / July 30th, 2013
China will conduct an urgent audit of all government debt, underlining concerns over rising financial risks in the world’s second-biggest economy.
The National Audit Office said in a one-line statement on Sunday that it had been instructed by the state council, China’s cabinet, to come up with a tally of how much money is owed by all levels of government from villages up to central authorities.
A separate article on the website of the People’s Daily, the official newspaper of the Communist party, said the state council had called for the audit on Friday afternoon and that it had ordered the national audit office to halt other projects to start on the debt tally immediately.
Chinese towns, cities and provinces racked up vast amounts of debt over the past five years as they fell back on heavy borrowing to power the economy through the global financial crisis. The central government has tried to slow the rise in debt but it has had little success as the economy has become increasingly reliant on credit and local governments have fallen deeper into the hole.
With growth now slowing, fears about the ability of local governments to repay what they owe have become more pressing. Earlier this year, Zhang Ke, a senior Chinese auditor, told the Financial Times that local government debt was “out of control” and could spark a bigger financial crisis than the US housing market crash. The audit is set to begin on August 1. The audit office did not say when the results would be published.
Thanks to BrotherJohnF