The National Audit Office (NAO) announced Sunday that it will conduct a nationwide review of government debt, with Chinese media reporting the NAO will soon dispatch auditing teams to provinces.

The amount of local government liabilities has been a topic of great concern in recent years, both at home and abroad. Many worry that local administrations may face a Detroit-like crisis, which could weigh further on the Chinese economy.

Such concerns are justified to a certain extent. In June, the NAO published an audit report on 36 local governments showing that their liabilities totaled 3.85 trillion yuan ($627.93 billion) by the end of 2012, up 12.94 percent from 2010. The report also found these administrators had illegally provided guarantees for 81.7 billion yuan of debts.

Given the risk presented by this debt, a nationwide check is necessary, which will not only uncover the real debt problem, but also lay the foundation for better supervision and regulation.

The author is Xu Lifan, a commentator.

Beijing Times