July 30 (Reuters) – Like William the Conquerer before him,
Premier Li Kequing is initiating his own Domesday survey in
China, and this time the attempt to curb local abuses of power
will have global economic consequences.
China’s State Council, chaired by Premier Li, has ordered
the National Audit Office to begin auditing what could total $2
trillion or $3 trillion of debt taken on by local governments.
The Audit Office will suspend other work and give all staff
“crash” training so that auditors can begin fanning out across
the country this week, according to a report by the state-run
The clear implication is that China is seeking to rein in
local governments, which have helped along what is clearly a
boom and may be a bubble by borrowing and spending freely on
local development. For China, this will act as another brake on
already slowing growth. For the rest of the world, it means less
demand, especially for the kinds of raw materials and energy
which go into real estate development and infrastructure.
William ordered the 1086 “Domesday Book” census of property,
so called because it was said to be as thorough and
wide-reaching as the final judgement, shortly after the Norman
conquest of England in order to nail down who owned what and who
might have usurped something belonging to the crown he now
possessed. Premier Li, who assumed office in March, has a
related but different problem. Despite laws against it, local
governments have taken on huge debts, an amount estimated by the
last audit at about $1.75 trillion at the end of 2010.