(Repeats to widen distribution)
* Jiangsu, Guangdong, Sichuan govts most indebted -audits
* Debt-to-GDP ratios highest in Guizhou, Chongqing, Yunnan
* Inner Mongolia says 28 pct of debt overdue but not paid
* Gansu, Shandong, Shanxi, Jiangxi have 8 to 10 pct of
BEIJING, Jan 27 China's local governments have
published separate audit reports detailing their combined public
debt of $3 trillion for the first time ever, to increase
transparency and quell investor concerns.
The audits showed China's wealthiest eastern provinces are
the most indebted, though repayment burdens are more onerous in
poorer areas such as the southwestern province of Guizhou, where
the ratio of debt to GDP is the highest, at 79 percent.
Most governments were shown repaying the vast majority of
their debt on time, though a handful, such as Inner Mongolia,
have fallen behind, with the portion of loans due but unpaid
running as high as 28 percent.
The burst of transparency follows criticisms from some
experts this month that China was not releasing enough
information about its local debt troubles, widely regarded by
investors as the biggest threat to its $9.4-trillion economy.
"The issues are the most pertinent in the poorer parts of
the country," said Louis Kuijs, an economist at RBS in Hong
Kong. "Those parts of the country have difficulty repaying their
Spurred by the need to sustain brisk growth in the world's
second-biggest economy, Chinese local governments have borrowed
heavily over the years to fund non-lucrative public works such
as sewage systems and railway lines.
Though some analysts welcome the public works and say China
is right to build its infrastructure now before costs escalate
as its economy grows, others worry that rapid investment has
generated waste and sowed the seeds for bad loans.
Audit statements from 30 of China's 31 local regions,
provinces and municipalities showed the governments of Jiangsu,
Guangdong and Sichuan are the three most indebted, with Jiangsu
borrowing the most, at 1.5 trillion yuan. Tibet was the only
region that did not release an audit report.
In terms of total debt as a portion of local gross domestic
product, however, Guizhou, Chongqing and Yunnan led the league.
The Beijing local government was at the top of the table in
terms of money borrowed as a percentage of annual fiscal income
at 100 percent, followed by Chongqing's 93 percent and Guizhou's
For a table of local government debt levels, please click on
WORRISOME BUT NOT A CRISIS
China released its most comprehensive audit of local
government finances last month in response to mounting investor
scepticism that its local debt problems are worse than official
The report showed debt surging 67 percent in two years, far
more than officials had publicly admitted.
But analysts said it did not suggest China was on the verge
of a crisis as total government debt is worth around 58 percent
of the economy, far from the levels of Greece and Japan, where
public finances are strained.
Fears that China may suffer higher bad debt levels
imperilling its financial system were compounded in the past two
years by its cooling economy, where growth narrowly missed a
14-year-low forecast in 2013.
The audit reports showed a handful of governments were
struggling to repay some loans. Inner Mongolia seemed to be
under the most strain, with overdue loans that have not been
paid making up 28 percent of total debt.
The governments in Gansu, Shandong, Shanxi and Jiangxi also
reported that unpaid loans accounted for between 8 and 10
percent of total debt.
Standard & Poor's expects 30 percent of bank loans to local
Chinese governments to sour if borrowers are not aided by other
authorities, the rating agency said in a report last week.
"Nonetheless, we don't see an imminent risk of a systemic
crisis from local government debt," it said, adding that China's
banks are buffered by strong profit growth.
(Reporting by Koh Gui Qing and Shao Xiaoyi; Editing by Clarence