BEIJING, Nov 24 (Reuters) - China will check local governments’ investment in railway projects, the state planner said on Friday, amid official concerns that breakneck infrastructure spending is racking up too much debt.
China will also take steps to prevent “disguised” debt issuance by local government via public-private partnership (PPP) projects, the National Development and Reform Commission said in a five-year railway development plan for 2016-2020 .
The government will push forward debt-to-equity swaps for high-speed railway projects with relatively sound investment returns, it added.
China has invested heavily in rail, and plans to spend 800 billion yuan ($115 billion) on the sector this year alone.
More than 50 cities are working on over 1 trillion yuan ($150.8 billion) worth of subways.
Financial magazine Caixin, citing unnamed sources close to the matter, reported last week that authorities in Inner Mongolia’s Hohhot and Baotou cities have scrapped approved projects worth billions of dollars in recent months due to concerns over finances.
Such infrastructure spending has helped to shore up economic growth but is now being scrutinised more closely after the government pledged to clamp down on financial risks.
China has plans to expand the track network to 150,000 km (93,200 miles) by 2020, including 30,000 km of high-speed rail.
China’s overall debt has jumped to more than 250 percent of GDP from 150 percent at the end of 2006.
Reporting by Beijing Monitoring Desk; Editing by Kim Coghill