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China orders ‘urgent’ audit of debts after IMF warnings

China’s leaders have ordered an “urgent” audit of local government debt, responding to warnings from the International Monetary Fund that rampant borrowing by the regions could trigger a serious crisis.

by Ambrose Evans-Pritchard, The Telegraph:

The State Council told the country’s audit office to suspend work on other projects and launch an immediate inquiry to assess the gravity of the risk. The audit office in the northern port city of Dalian has cancelled holiday leave, and will dispatch inspectors this week.

Andy Xie, a financial commentator at news website Caixin, said reliance on land sales to fund regional spending was an accident waiting to happen. “While household income may have tripled in a decade, the average land price has risen by over 30 times. Income growth to come cannot justify the current price of land. Nor can a supply shortage. China has no shortage of land. The sustainable land value is probably 70pc to 80pc below current levels,” he said.

Read More @ Telegraph.co.uk

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