Local government debt, shrouded in mystery, is now facing an unprecedented "audit storm." Sichuan Province, located in the upper reaches of the Yangtze River, launched its investigation a month ahead of schedule. According to the Sichuan Provincial Department of Finance, 47 billion yuan in bonds remain to be repaid by 2017.

　　According to media statistics, Sichuan Province has issued a total of 13 urban investment bonds this year, amounting to 17.8 billion yuan. Of the outstanding urban investment bonds, about 23% of the funds are used directly to repay bank loans.

　　47 Billion Yuan of Local Debt Matures Within 4 Years

　　In early July this year, the Sichuan Provincial Audit Office stated that, on the basis of gaining a clear picture of the basic situation, this audit would focus on examining the operations and development of platform companies and whether they have met the requirements of the Provincial Party Committee and Provincial Government for developing "1+N (one platform company and multiple subsidiaries)" enterprises; examine the scale and efficiency of investment and financing; examine the establishment and operational effectiveness of major investment and financing decision-making mechanisms; examine the control of investment and financing risks and debt repayment capacity; and examine the role of platform companies in local economic development and issues of sustainable development.

　　The platform companies under investigation mainly include Sichuan Development (Holding) Group Co., Ltd., Sichuan Provincial Railway Industry Investment Group Co., Ltd., Sichuan Provincial Transportation Investment Group Co., Ltd., Sichuan Provincial Energy Investment Group Co., Ltd., Sichuan Provincial Water Resources Investment Group Co., Ltd., and Sichuan Industrial Revitalization and Development Investment Fund Company—six companies in total, along with some of their subsidiaries.

　　According to the Sichuan Provincial Department of Finance's disclosure to the media, from 2009 to 2012, Sichuan Province issued local bonds of 18 billion yuan, 18 billion yuan, 13.5 billion yuan, and 13.5 billion yuan respectively, ranking first nationwide for four consecutive years. Apart from the 18 billion yuan issued in 2009, which has been fully repaid this year, another 47 billion yuan remains to be repaid by 2017.

　　The Sichuan Provincial Department of Finance stated that of the 63 billion yuan in local bonds issued over these four years, 8.8 billion yuan was invested in post-earthquake reconstruction projects, 25.2 billion yuan in livelihood projects such as affordable housing, and a total of 29 billion yuan in infrastructure projects.

　　As for Sichuan's debt risk level, Wang Yihong, a deputy to the National People's Congress and deputy director of the Sichuan Provincial Department of Finance, said in March this year: "Sichuan Province's debt level is generally controllable in terms of risk, with localized risks present." According to him, the existence of localized risks refers to excessive debt in some localities and poor use and management of debt funds.