A former adviser to the People’s Bank of China has said the country’s central government should issue more treasury bonds to replace local debt, a call paired with entreaties for deeper reforms to address weak demand ahead of a crucial economic meeting this month.
According to Li Daokui, director of the Academic Centre for Chinese Economic Practice and Thinking at Tsinghua University, high local debt loads have already dampened economic growth.
Li, who was an adviser to China’s central bank between 2010 and 2012, has also advocated that the central government should shoulder some of the burden weighing down localities, arguing regional authorities have played a critical role in driving the country’s industrial growth.
“25 per cent of the purchasing power in China’s gross domestic product is reflected by local government spending,” Li said at a forum arranged by the state-backed Beijing News on Wednesday.
“The central…
