Chongqing mayor denies high deficit

Huang Qifan, mayor of southwest China's Chongqing Municipality, on Friday said the scale of the megacity's debt was in line with its economic development status, denying media reports that the city was facing a serious deficit problem.

Huang said the city, with a debt ratio of 60 percent, was among the 10 Chinese provinces and cities with the lowest debt ratios.

"By the end of last year, debt carried by Chongqing was 260 billion yuan (41.3 billion U.S. dollars), or 1/40 of China's total government debt, which matches with the city's economic development status," said Huang at a finance conference.

On the other hand, the city's gross domestic product (GDP) exceeded one trillion yuan. Compared with the huge GDP figure, the debt scale is safe, according to Huang.

According to the city's own figures, Chongqing's fiscal revenue last year was 290.9 billion yuan, while its financial expense reached 396 billion yuan.

The difference, up to 100 billion yuan, has brought about media reports that Chongqing's development was actually funded by the central government.

"Such opinions were based on asymmetrical information and vague understanding of China's fiscal and tax system," according to Huang.

He said the central government established a transfer payment system to help the less-developed western region of China, transferring payment from the exchequer to provinces, municipalities and autonomous regions in the country's west.

"Last year, the transferred payment to Chongqing was 100 billion yuan, which according to the China's Budget Law, is not a deficit for the city," he said, adding the city achieved zero-deficit last year.

The mayor said, of the 12 provinces, municipalities and autonomous regions in the west, Chongqing recorded the lowest ratio of the amount of transferred payment from the central government to the local fiscal revenue.

Among the total budget expenditure of Chongqing municipality government, the ratio of transferred payment from the exchequer decreased from 68 percent in 2002 to 44 percent in 2011, he said.

"Chongqing has been less dependent on financial support from central government over these years."

Huang also noted the city initiated the land reserve system in 2002, and currently has reserved land totalling over 20,000 hectares, providing a significant condition for the municipal government to control commercial housing price and construct affordable houses.

Compared with other cities, there was no sudden hike or drop of house prices in Chongqing, and there was enough land reserves for construction of infrastructures and low-rental houses, he added.

"Chongqing now is at a critical moment amid high attention from the outside world," he said, noting Chongqing will further promote the city's economic growth, ensure stability, deepen reform and opening up and better coordinate rural and urban development.