The finance and agriculture officials have begun an
investigation of major debts incurred by rural authorities, the
Beijing-based Economic Observer reported Tuesday.
The total owed by township governments and village committees is
estimated to reach 400 billion yuan (US$50 billion) according
reports on a survey by the Ministry of Agriculture (MOA).
Most of towns and villages in heavy debt are located in
underdeveloped regions in central and western China, the newspaper
reported, commenting that the heavy debt hindered rural reform and
restricted development.
In 1999, the State Council issued a circular on investigating
and clearing bad debts at township and village levels, but the task
was incomplete as the MOA had no rights to clear or transfer
debts.
On October 18 this year, the State Council issued another
circular on investigating township government and village committee
debt incurred before December 31, 2005.
This time the Ministry of Finance (MOF) is required to make
proposals and find solutions to clear the debts.
"The government will give priority to the clearance of debt
arising from compulsory education, infrastructure construction and
public welfare undertakings," according to an MOF preliminary
plan.
Experts estimated the debt at township level had increased at 20
billion yuan annually since 2004.
Lending rates for township governments and village committees
are excessively high, generally above 15 percent, and even up to 30
percent.
"The statistics will be collected by local governments after
their verification and calculation and then reported to the central
government," an MOF official said.
Many local governments believe debts accumulated over long
periods can only be repaid or transferred by the central
government.
"Our debt is so huge that no one except the central government
can clear it," an official of Inner Mongolia Autonomous Region said.
(Xinhua News Agency November 29, 2006)