China issues rules to manage local government debts

China's State Council, the country's cabinet, on Thursday published rules to strengthen the supervision and management of debts incurred by local governments.

It is the first document by the State Council aiming to manage and control risks posed by trillions of yuan in local government debt.

Auditing results indicated that risks from government debts are generally controllable, according to a brief statement posted on the official website of the Chinese central government.

But there are some risks and problems related to borrowing, management and fund use that need to be addressed, the statement said.

The State Council required the establishment of an integrated management mechanism for local governments' debts, which will cover borrowing, use of funds, and repayment.

Late last year, China disclosed its total government debts. Auditing results showed that debt directly incurred by China's local governments totaled 10.88 trillion yuan (1.77 trillion U.S. dollars) at the end of June of 2013.

The debt guaranteed by local governments at various levels amounted to 2.66 trillion yuan, and debt governments might have some liability for stood at 4.34 trillion yuan.