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On March 8, the ministry announced local
governments would be permitted to swap 1 trillion yuan ($161.2
billion) of maturing, high-interest local debt for new official
municipal or provincial bonds, to help cut interest costs.
Zhu said local governments were burdened by piles of short-term
debt, including that raised through trust products.
"In accordance with the State Council's plans, we will turn such
short-term financing into long-term financing, and the size for
2015 is 1 trillion yuan," Zhu told an international conference
on China's development attended by government officials,
business leaders and academics.
"This will help reduce the funding costs and reduce risks."
But the authorities must prevent the problem of "moral hazard"
in the process, he said, without elaborating.
The government will keep economic growth stable this year while
pushing forward financial and fiscal reforms, Zhu added.
China has been trying to reduce excess factory capacity, local
government debt and risks from a cooling property market, which
are likely to drag growth to a quarter-century low of around 7
percent this year from 7.4 percent in 2014.
"The pre-condition for our deleveraging is to maintain
relatively stable economic growth," Zhu said.
The central bank has cut interest rates twice since November, on
top of a cut in bank reserve requirements in February, amid
concerns about growing deflationary risks, and more such moves
are expected.
In addition, the government plans to run its biggest budget
deficit in 2015 since the global crisis to support spending.
($1=6.2037 Chinese yuan)
(Reporting by Kevin Yao; Editing by Clarence Fernandez)
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