China is ‘fully confident’ in fending off systemic debt risks

China is fully confident of its ability to fend off systemic debt risks, while it continues to strengthen control over local government debt, its finance minister Xiao Jie said on Wednesday.

China will reasonably set quotas on local government debt issuance and keep cracking down on “chaotic” debt financing, Xiao said at a press briefing held during China’s annual parliament meeting.

Local government finances and burgeoning debt levels in China have been a source of concern for policymakers as the central government looks to remove expectations of implicit guarantees for government financing vehicles.

“Whoever raised the debt would be held responsible for it,” Xiao said, stressing he was fully confident that such measures would prevent China from suffering systemic debt risks.

Authorities expect no significant changes in government debt ratio in the coming years, versus the level in 2017, he said.

China’s total outstanding government debt stood at 29.95 trillion yuan ($4.73 trillion) at end-2017, with its debt ratio against GDP dropping to 36.2 percent from 36.7 percent in 2016.