Cheng Siwei: Local Debt Is Subprime Mortgage With Chinese Characteristics.

"I said in 09 November, the subprime mortgage in the United States is to lend money to individuals who have no repayment ability. The sub loan with Chinese characteristics is lending the money to the local government without repayment ability." in the 2011 summer Davos 16 Phoenix Satellite TV conference, Cheng Siwei, deputy chairman of the standing Committee of the National People's Congress, said so when he accepted the financial network reporter's question.

　　 Cheng Siwei It is pointed out that according to the report of the Audit Commission, China's local debt is about 10 trillion and 700 billion yuan, and about 1/3 of the local governments repay their debts. There are two pessimism arguments at the moment. First, the central government believes that the central government has enough money to pay the local government. Second, the total debt and local fiscal revenue ratio is controllable. But he did not quite agree with these two views.

He believes that if local debt is paid by the central government, it is natural for local governments to default. China is training local governments to "lay off". It is possible for the central government to help the local government solve some debts related to people's livelihood and social security, but if the debts are paid by the central government, the expenditure of the central government on people's livelihood and social security will be reduced, and finally the people will pay the bills.

He said that local governments are always debt The volume is also not interesting, because those local governments that are not in debt or have little debt will not help the local governments with more debts to repay their debts, and the latter can only rely on the central government. If it still can not afford it, part of the debt will become bad loans for banks, and the bad debts will eventually be paid by the public.

In his view, the United States subprime It is lending money to individuals who are unable to repay their debts. Subprime loans with Chinese characteristics lend money to local governments without repayment ability.

He said that since the beginning of last year, the central government has been investigating and handling the situation of local debt, which is a problem China must solve.