China orders audit of government debt

China has called for an audit of all government debt, the national auditor announced Sunday, as concerns grow over official liabilities in the world's second-largest economy. "In line with a demand by the State Council in recent days, the National Audit Office will organise auditing agencies nationwide to carry out an audit of government debt," the office said in a one-sentence statement on its website. The powerful State Council, China's Cabinet, is headed by Premier Li Keqiang. The demand for the audit was "urgently" issued Friday afternoon, the People's Daily, newspaper of the ruling Communist Party, said on its website citing a source. It said the audit office suspended all other projects to prepare for the undertaking and would dispatch personnel to provinces and cities in coming days. China's debt problem is considered to be a serious potential drag on its economy unless steps are taken to rein it in. The International Monetary Fund earlier this month estimated that the combined obligations of both central and local governments stood at 45 percent of China's gross domestic product. Concerns about the debt burden centre on trillions of dollars of government borrowing, especially by local authorities. While such debt has helped the investment-based economy expand strongly, economists and the government itself believe it is unsustainable and the the growth model should be rebalanced towards consumer demand. The National Audit Office said it had no more information to announce on the planned audit at present, according to the People's Daily. Japan, the world's third-largest economy, suffers from an even worse problem. Public debt stands at more than twice the size of the economy, the worst figure among industrialised nations.