Fears that China's cities have over-stretched themselves during the country's economic boom will be assessed by the state's auditors in a move that could affect UK councils.
For several years, experts on China's economy have expressed fears that much of the sub-national growth across the country has been fuelled by huge local government debts.
Some experts put the figure for China's local government debt at $3 trillion, and there are fears that some local councils could collapse – a move that could initiate local authority credit downgrades globally.
China's national audit office last week announced it would quickly assess all borrowing by public bodies, and put on hold other auditing projects to complete the emergency work.
Chinese economists reassured investors that the country has built up reserves of $3.5 trillion. Economists Ting Lu and Xiaojia Zhi played down fears over local council collapses, and said the national government could take ‘sensible measures in coming years'.