Skip to content
Subscriber Only

Lou Says China Should Let Local Governments Default on Debt

  • ‘They need to shoulder responsibility,’ Lou Jiwei tells forum
  • Comments echo those by Premier Li, other government officials
Yuan Close-Up
Photographer: selensergen/Getty Images/iStockphoto

Former Finance Minister Lou Jiwei said China should allow smaller local governments to default on debt because it would signal that central government bailouts aren’t assured.

Such defaults would educate investors that their investments will be allowed to go bad, Lou said Friday at a public finance forum in Beijing. "They need to shoulder responsibility," said Lou, who’s now chairman of the country’s social security fund. "Nobody will save them."