Local government debts must be addressed

The government should make a package of arrangement to help local governments digest their debts gradually, said an article in the 21st Century Business Herald (excerpts below).

China's economic growth is slowing down. But the government is not launching any stimulus packages.

Some local governments have debt issues.

They may believe that the central government's financial support is the most reliable resort for local governments to relieve the debt pressure. If so, they are quenching their thirst with poison.

The overdue tax distribution reform between the central and local governments has the latter facing a cash shortage.

That's why real estate markets in some places are becoming hot again because of local government desire for funds.

The central government should allow the bankruptcy of enterprises and be prepared for unemployment. The central government should make arrangements for debt restructuring as well as unemployment to relieve local government pressure.