BEIJING – China has instructed heavily indebted local governments to delay or halt some state-funded infrastructure projects, three people with knowledge of the situation said, as Beijing struggles to contain debt risks even as it tries to stimulate the economy.
Increasing its efforts to manage $13 trillion in municipal debt, the State Council in recent weeks issued a directive to local governments and state banks to delay or halt construction on projects with less than half the planned investment completed in 12 regions across the country, the sources said.
Beijing has been tightening curbs on debt in recent months to defuse risks to the world’s second-largest economy and its financial stability, while also trying to stimulate growth that has long relied on infrastructure investments by local governments.
Infrastructure targeted in the latest directive, which has not been previously reported, includes expressways, airport reconstruction and expansion, and urban rail projects, one source said.
Some projects, such as those approved by the central government or for affordable housing, are exempt, two sources said.
The sources asked not to be identified as the directive was confidential.
The State Council Information Office, which handles media queries for the council, China’s cabinet, did not respond to a request for comment.
Reuters reported in October that the council had restricted the ability of local governments in the 12 regions to take on debt and limited the state-funded projects they could launch.
Some projects, such as those approved by the central government or for affordable housing, are exempt, two sources said.
The sources asked not to be identified as the directive was confidential.
The State Council Information Office, which handles media queries for the council, China’s cabinet, did not respond to a request for comment.
Reuters reported in October that the council had restricted the ability of local governments in the 12 regions to take on debt and limited the state-funded projects they could launch.
Source: REUTERS