Comment on "Broaden revenue streams", (China Daily, March 30)

As a matter of fact, the debt problem is not uncommon in the history of China's reform and opening-up. We encountered a tripartite debt problem in the early 1990s, and weathered the debt problems of State-owned enterprises and commercial banks later on. We applied debt-to-equity swaps, established four asset management companies, stripped bad debts, and initiated share-holding reforms to solve the problems.

What should we do now to solve the local public debt problem?

Asking for an extension is just a way of buying time, and would not solve the fundamental problem. Besides, an extension means more interest, thus making local governments sink deeper into debt. The author proposed five suggestions, I agree with the fourth, as it is the most feasible at present, that is, to permit and invite more non-government capital to invest in public services and construction. As the author says, this would help reduce the financial burden on local governments, promote the optimum allocation of social funds, and attract capital from society to help develop the local economy.

Having said that, the fundamental solution, in my view, would be delegating the authority of issuing local public debt to local governments, broadening revenue streams for them, and opening up the government budget. But all these require very extensive reforms of tax and budget systems that cannot be achieved in a short period of time. In any case, the local public debt problem should be dealt with properly to maintain the stability of our economy.

Zhang Xiaodong, via e-mail

Readers' comments are welcome. Please send your e-mail to opinion@chinadaily.com.cn or letters@chinadaily.com.cn or to the individual columnists. China Daily reserves the right to edit all letters. Thank you.

(China Daily 04/11/2012 page9)