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New national audit on local government borrowing in China: three years later,little progress

New national audit on local government borrowing in China: three years later,little progress

Little has changed three years after policymakers and China watchers were shocked by the extent of local government borrowing revealed by China’s first national audit. On December 30, China’s National Audit Office released an update showing that local government borrowing has not only grown but the structure of borrowing if anything has gotten worse. The results of the audit reiterate that regulatory efforts to control the rise of local government borrowing have been ineffective, and more comprehensive fiscal reforms are the solution to control growing risks in local government borrowing.