Dec 22, 2018 05:56 PM

China’s Local Government Finances Remain Murky — But Whose Are the Murkiest?

Some of China's provincial governments are revealing more about their income, spending, debts, and assets, but most remain highly opaque, according to a new university report.

Provinces were particularly unwilling to give out information about their assets and liabilities, according to the report from the Shanghai University of Finance and Economics. China's local governments could hold up to 40 trillion yuan in off-balance sheet debts, according to an October report from S&P Global Ratings — and the scale and lack of transparency of these debts has raised concerns that they could expose China's financial system to significant risk.

Wealthy Guangdong province, in China's south, was the most transparent of the 31 provincial-level regions surveyed by the university study, with a score of 69.38, indicating that this province handed over nearly 70% of the information that was requested by researchers from the university’s Public Policy Research Center. Least transparent was Jiangxi province, in the southeast, with a score of just 26.98.

The average score of the 31 regions was 53.49. While there has been a steady upward trend in the average score — to 48.27 in 2017 from just 21.7 in 2009 — the general level of transparency in China's local governments remains poor, the study concluded.

Cash-strapped authorities, who until recently were prohibited from issuing bonds to fund their spending, turned to a range of fundraising channels, including the establishment of financing vehicles, to keep the debts off their books. The central government has been trying to clean up local government debt for several years, with the dual aim of finding out exactly how much debt there is and making it more transparent by bringing it back onto budgets.

A new evaluation system for central and local budgets will be rolled out over the next three to five years, intended to improve transparency, accountability, and efficiency. Officials will be held responsible for their budgetary decisions for life under the new system.

Contact reporter Ke Baili (

Share this article
Open WeChat and scan the QR code