At the same time, national and local government debt now approaches 200 percent of GDP.
All told, outstanding local government debt has exceeded central government debt since 2007.
However, Huang believes there are significant risks associated with local government debt.
Wang said about 20% to 30% of the total local government debt is unlikely to be repaid at all, but that will not require a massive bailout.
And the National Audit Office estimates that 23% of local government debt, which it put at 10.7 trillion yuan in June, depends on land sales for repayment.
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The National Audit Office (NAO) estimated that the ratio of local government debt to aggregate income was 84 percent, a level that appears to be manageable, Barclays analysts say.
Xiang Huaicheng told reporters that earlier government reports of around Rmb11tn in local government debt had seriously underestimated the total but that overall debt levels in China were manageable.
Among the other domestic risks, the fund said that Beijing needs to keep the local government debt in check, which has been a cause of concern for many analysts.
BlackRock said that based on its evidence, local government debt levels should be manageable even if state banks were forced to write down significant amounts of non-performing loans because of real estate.
There are no recent official data providing estimates of outstanding local government debt, although the debt likely rose to at least 12 trillion yuan at the end of 2012 (or 23% of GDP).
Chinese Premier Wen Jiaboa said that local government debt increased by around 300 million yuan in 2011, but that is compared to a much larger decline of 3.4 trillion in 2009 and the 1.7 trillion in 2010.
Just to recap the analysis in the previous post, over the past 20 years from FY1990 to FY2011 outstanding national and local government debt grew by JPY 500 trillion, 127.8 percent of GDP on a net basis (229.1 percent on gross), the highest among OECD countries by far.
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The rapid increase in local government debt to an estimated 7.6 trillion yuan, stemming from the stimulus program begun in late 2008, is likely to lead to some rise in nonperforming loans at banks, given that about one-third of the debt is estimated to be at risk.
Zervos says she remains overweight on local Brazilian government debt (opposed to sovereign debt priced in dollars) and has moved from neutral to slightly overweight on the Brazilian currency.
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Wang Tao, chief economist with UBS AG in China, told China Daily on Tuesday that extensions of local-government debt already started last year amid concerns that municipalities were hurting from a sharp decline in housing development and fixed asset investments from Beijing.
Business debt was flat, but local and state government debt grew 4.3% and federal government debt ballooned another 18.5%.
Earlier this month, Fitch Ratings lowered its rating on China's local-currency government debt, warning of a credit buildup.
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Even Germany - with its debt-laden local government - cannot guarantee the debts of the rest of Europe.
Similar to many markets nationwide, Kansas City developers delivered a number of new projects financed with generous local-government incentives and cheap bank debt.
But some economists worry that such high rates will worsen the recession, and make it hard for the government to service local-currency debt.
It already did that and has, in addition to inflation, created historically high property prices, vacant apartment buildings, and debt-swollen local government financing vehicles.
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Together with local debt, long term government bonds outstanding will total some JPY 900 trillion, close to 180 percent of GDP, a level higher even than crisis-gripped Greece.
Asked about the government's spending plans in Edinburgh, Mr Brown told local business leaders on Friday the government had cut national debt as a proportion of national income over the past decade.
As a result of the tax preference for munis, the federal government not only forgoes the revenue that it would otherwise be collecting from the interest income, but more importantly, it effectively subsidizes greater spending and debt by state and local government agencies.
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In Albacete, to the north, the power company cut the supply to municipal-owned buildings last week, fed up that the local government was simply ignoring its million-euro debt.
With the fiscal measures approved, the government will be able to renew its local-currency debt.
The government is issuing more debt, particularly in local currency.
Hungary remains hobbled by corruption (a cosy cartel, especially in local government, slices up European Union funds), a heavy burden of debt and a black economy that may account for one-fifth of GDP.
Despite the strict prohibition, their debt has skyrocketed as local officials incurred obligations through LGFVs, local government finance vehicles.
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Luz Padilla of DoubleLine indicated in the call that while there may be less opportunities in emerging market government debt, there are still opportunities in emerging market corporate and local currency debt.
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