Mountain of local-govt debt looms over Beijing

Relief measures: A barista serves coffee at an outlet in Beijing. The central government should significantly expand its upgrade incentives for consumer products and equipment, a leading economist says. — Reuters

SHANGHAI: China needs to vastly step up its efforts to cleanse the balance sheets of the nation’s local governments, giving them the space needed to support consumer spending and strengthen the economy, one of the nation’s prominent economists says.

The central government should take on at least 20 trillion yuan or about US$2.7 trillion worth of local sovereign debt, David Li Daokui, an economics professor at Tsinghua University and a regular adviser on policy to Beijing, said in an interview.