China government debt 'controllable': Wen

BEIJING: Chinese Premier Wen Jiabao said government debt was "overall safe and controllable" and key projects would continue to receive funding to avoid "systemic risks", state media said Monday.

An explosion in lending in recent years has fuelled concerns that local governments, which borrowed heavily to build roads, bridges and luxury apartment buildings, will default as the world's second largest economy slows.

China's audit office said earlier this month that it had uncovered 530.9 billion yuan ($84 billion) in misused funds involving local government debts.

That compares with an estimated 10.7 trillion yuan in local government debt at the end of 2010 -- or about one quarter of China's 2010 gross domestic product - but analysts believe the real figure could be much higher.

"Currently our government debt is overall safe and controllable," Wen told a government financial work conference earlier this month, according to the People's Daily, the mouthpiece of the ruling Communist Party.

"We are taking the issue of managing local government debt very seriously. Through clean-ups and regulation, the trend of expanding investment vehicles has been effectively contained." (AFP)