Salient to Investors:

Ding Shuang at Citigroup said local-government debt is a source of concern about China’s growth, and the new leadership is trying to give a clear answer as confidence in the Chinese economy from all sides has weakened. Ding said China has at least 12 trillion yuan of local-government debt.

Zhu Haibin at JPMorgan Chase said an audit is the first step to solve the local-government debt problem, and while local government debt may have increased to 14 trillion yuan, the amount as a proportion of GDP has not changed much.

Yao Wei at Societe Generale estimates that the debt servicing cost of non-financial companies and LGIVs was 39 percent at the end of 2012, based on an average interest rate of 6.3 percent and an average maturity of 4.4 years – their debt was roughly 145 percent to 150 percent of GDP based on limited data on lending, especially for shadow banking.

Charlene Chu at Fitch Ratings puts total lending by banks et al at 198 percent of GDP in 2012 versus 125 percent 4 years earlier.

Hiroaki Muto at Sumitomo Mitsui Asset Mgmt said consumption will continue to stay solid.

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