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Xinyuan Real Estate Co., Ltd. Message Board

  • infn444 infn444 Apr 17, 2013 12:20 AM Flag

    Debt "out of control"

    A senior Chinese auditor has warned that local government debt is "out of control" and could spark a bigger financial crisis than the U.S. housing market crash.

    Zhang Ke said his accounting firm, ShineWing, had all but stopped signing off on bond sales by local governments as a result of his concerns.

    "We audited some local government bond issues and found them very dangerous, so we pulled out," said Mr. Zhang, who is also vice-chairman of China's accounting association. "Most don't have strong debt servicing abilities. Things could become very serious."

    (Read More: Has China's Economy Hit a 'Dead End'?)
    The International Monetary Fund, rating agencies and investment banks have all raised concerns about Chinese government debt. But it is rare for a figure as established in the Chinese financial industry as Mr. Zhang to issue such a stark warning.

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