China will strictly control local government debt quotas and step up checks on illegal debt guarantees, finance minister Xiao Jie said on Tuesday.
Government debt risks are generally under control, Xiao said at a news conference during the annual meeting of parliament.
China will continue a debt-swap program for local governments to help contain debt risks, Xiao said.
The government has tightened controls in recent years on new local government debt to help ward off financial risks following a borrowing binge since the global financial crisis.
China capped the rise in outstanding local government debt at 17.2 trillion yuan ($2.49 trillion) in 2016, up from 16 trillion in 2015, excluding bonds issued under a debt swap scheme.
The government will continue to improve the financing environment and push forward the standardization of public-private partnership (PPP) projects, Xiao said.
A total of 1,351 PPP projects worth 2.2 trillion yuan have been signed by the end of 2016, with the timeframe for implementing such projects becoming shorter, he added.
Moody’s Investors Service said in February that misaligned incentives between China’s central and regional and local governments are an obstacle to economic reform and rebalancing, a credit negative.
Authorities are also struggling to clamp down on illegal borrowing by local governments, according to a report in financial magazine Caixin last month.
(Reporting by Elias Glenn, Writing by Kevin Yao; Editing by Kim Coghill)