China Downplays Rising Debt

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Nando Times

China downplays rising debt

The Associated Press

BEIJING (March 15, 2001 5:28 p.m. EST) - Chinese Premier Zhu Rongji on Thursday brushed off concerns about the nation's mounting debt levels, saying the government could easily repay what it owes and that money borrowed had been well spent.

Speaking at a news conference at the end of the Chinese legislature's annual meeting, Zhu said 1.5 trillion yuan ($181 billion) spent on infrastructure projects over the past three years helped to revitalize China's economy, "so the outcome of these policies has been very effective and successful."

Zhu said he expects the government to issue another 150 billion yuan ($18. 1 billion) in special treasury bonds in 2002 to fund a fifth year of the stimulus program.

Zhu said debt levels built up in the past few years have grown to 14 percent of China's annual economic output, well below the internationally accepted level of 20 percent.

China has issued 360 billion yuan ($43.5 billion) in special bonds over the past three years to fund infrastructure construction and technical upgrades at state-owned firms.

This year's budget deficit is expected to rise to almost 260 billion yuan ($31.4 billion), roughly equaling last year's record shortfall. But Zhu said economic growth provided by stimulus spending had helped swell treasury coffers.

"We are in a sound financial position to service all those treasury bonds," Zhu said. "All of the deficit has been used to support infrastructure projects. We are able to pay back twice as much of the debt that we owe. I don't see any real risk."

In the past three years, China built 105,600 miles of roads, built or upgraded 6,200 miles of railways, and strengthened dikes on the flood-prone Yangtze River, Zhu said.

-- Rachel Gibson (rgibson@hotmail.com), March 15, 2001

Answers

Chinese Premier Zhu Rongji is correct when you consider how much of the US debt China owns.

-- (perry@ofuzzy1.com), March 15, 2001.

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