Risks at local govt financing vehicles controllable

BEIJING -- Risks at local government financing vehicles are controllable, according to an anonymous source cited in Friday's China Securities Journal.

About 98 percent of outstanding loans, or 9.1 trillion yuan ($1.45 trillion), went to borrowers with rich cash flows or those with relatively rich cash flows, he said.

Risks of borrowers are classified based on the ratio of cash against loans and interests due, according to rules of China Banking Regulatory Commission.

Those with rich cash flow refer to borrowers with cash flows more than their loans and interest due. The category is followed by those with cash flows which are 70 to 100 percent of their loans and interest due, and they slightly rely on guarantees of local government finance.

The outstanding loans at local government financing vehicles stood at 9.3 trillion yuan at the end of 2012, up less than 2 percent in the previous two years, the paper cited CBRC Chairman Shang Fulin as saying at an earlier date.