February 20, 2012 / 4:38 PM / in 7 years

China to push fixing local government debt, housing loans

BEIJING (Reuters) - Defusing questionable local government debt and containing risky real estate loans are priorities at a time when the global financial crisis is deepening, China’s banking regulator said on Monday.

China’s authorities will strive to prevent such systematic financial risks, said Shang Fulin, head of the China Banking Regulatory Commission, in a statement on the CBRC’s website.

Shang urged banks and financial institutions to “enhance their support for China’s real economy,” according to the statement, which was carried by the government-run Xinhua News Agency.

China launched an economic stimulus package in late 2008 to counter the impact of the global financial crisis but which sparked rampant bank lending to local governments.

The resulting debt - officially estimated at 10.7 trillion yuan ($1.7 trillion) - has caused concerns among economists that the debt could destabilize the economy.

China’s central bank released a similar statement last week saying it would pay close attention to risks in local banks, non-bank financial institutions and private lending in 2012.

Reporting by Terril Yue Jones

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