Top auditor warns of economic development risks

China's top auditor on Thursday warned of risks threatening economic development, calling for better management of finances and state-owned assets, as well as the sound implementation of macro-economic policies.

Liu Jiayi, auditor general of the National Audit Office (NAO), made the warning at an ongoing session of the Standing Committee of the National People's Congress (NPC), China's top legislature.

SOARING LOCAL DEBTS

Local governments must improve their debt management, as local debts have increased sharply, Liu said.

Debts owed by 18 provincial-level governments and municipalities have risen sharply, hitting 3.85 trillion yuan (626 billion U.S. dollars) by the end of last year, according to a NAO report submitted to the NPC Standing Committee.

The debts have risen by 13 percent over the past two years, Liu said, adding that about 46 percent of the accumulated debt was owed after 2011.

Four provinces and eight provincial capitals have seen their debt rise at rates greater than 20 percent, with the highest rate coming in at 65 percent, he said.

Some governments have relied too much on land revenues and new borrowing to repay old debts, he said.

For example, about 45.4 billion yuan in new debt was created for the purpose of repaying debts incurred by the construction of highways in 2012, he said.