(Adds detail, analyst comment)
BEIJING Feb 23 China's finance ministry said on
Thursday some city and county-level governments are illegally
providing guarantees for borrowing by related entities, as the
country struggles to control rapidly growing debt.
China will stop these illegal activities, the Ministry of
Finance said in a notice on its website, and strictly control
local government debt risks.
The ministry on Tuesday issued rules for local-government
bonds this year, telling regional governments to set
"reasonable" bond issuance plans for 2017 and to control the
pace of debt sales.
The government has tightened controls in recent years on new
local-government debt to help ward off financial risks following
a borrowing binge since the global financial crisis, but
analysts say risks remain.
"In early 2016 the (Ministry of Finance) confessed that debt
pressure on (local governments) is mounting, instances of
borrowing in breach of regulations or in disguised form are
still occurring and the prevention and control of potential
risks is becoming exceptionally difficult," Fitch Ratings
analysts said in a research note on Wednesday.
The ministry said in November local-government debt was
under control and the debt burden would not show a big change
(Reporting by Beijing Monitoring Desk and Elias Glenn; Editing
by Jacqueline Wong)