China dismisses reports Jiang has died (AFP)

BEIJING (AFP) – China's official media said Thursday that reports claiming former president Jiang Zemin had died were "pure rumour", after days of intense speculation about his health.

The state-run Xinhua news agency quoted "authoritative sources" in its report denying the rumour, which emerged last Friday after the 84-year-old failed to appear at celebrations marking the Communist Party's 90th birthday.

Speculation gathered momentum this week and culminated with Hong Kong and Japanese media putting out reports confirming his death.

Hong Kong broadcaster ATV announced Wednesday that the former president had died, citing unspecified sources and giving no details. It said it would air a special one-hour programme on Jiang but later cancelled it.

The Japanese daily Sankei Shimbun also reported Thursday that Jiang had died in Beijing, quoting "a source involved in Japan-China relations".

The Xinhua dispatch gave no further details on the former leader's health. Foreign ministry spokesman Hong Lei, who was repeatedly asked about the issue at a briefing, refused to comment and referred reporters to the Xinhua story.

Then in an unusual twist, ATV withdrew its news report and made a public apology "to the audience, Jiang Zemin and his family" in a brief statement.

Rumours have surfaced in the past that Jiang, who reportedly still wields a lot of power in the inner party sanctum, may be seriously ill.

His absence from the Friday gala in central Beijing was conspicuous as many other retired party and national leaders -- including former prime ministers Li Peng and Zhu Rongji -- were present.

On Thursday, searches for his name and other terms such as "cardiac arrest" -- one of his rumoured causes of death -- on the popular Twitter-like Weibo service were blocked, an indication that censors were barring information.

China routinely censors online content it deems politically sensitive. This includes the health of leaders, which is considered a state secret, apparently due to concerns illness might affect the appearance of stability in the party.

Even the word "river" -- the meaning of Jiang's surname -- was barred Thursday on Weibo, which more than 100 million Chinese people use. Typing "Jiang Zemin died" on search engine Baidu.com yielded no results either.

Jiang was appointed head of the ruling Communist Party by late leader Deng Xiaoping following the crushing of the 1989 Tiananmen pro-democracy protests.

He stepped down as the country's president in 2003 after guiding the nation through more than a decade of blistering economic growth, marked by a lack of corresponding political reforms.

Jiang is part of the so-called "third generation" of Chinese Communist leaders, a more technocratic and professional ruling elite to follow the first two "generations" of national founder Mao Zedong and then Deng.

In an attempt to get around China's online police force on Thursday, netizens were using characters that sound the same as the ones that make up Jiang's name to discuss the rumour.

For instance, they were using a character pronounced "jiang" that means stiff -- in reference to a corpse -- and "ming", which sounds similar to the last character in Jiang's name and means the underworld.

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China state media dismiss reports of Jiang's death (AP)

BEIJING – China on Thursday dismissed as rumor reports that retired President Jiang Zemin, who led the country through massive changes after the crushing of the 1989 Tiananmen Square democracy movement, has died.

The official Xinhua News Agency quoted what it called authoritative sources as saying the reports were "pure rumor." The one-sentence dispatch in English wasn't carried by the Chinese-language service of the state-run agency, indicating it was meant for overseas audiences.

The need to comment underscores the difficulties the secretive, authoritarian government faces in controlling information. While state media are under tight control, foreign reports seep into China via the Internet, giving Chinese access to news — and rumors — the leadership dislikes.

An official from the Cabinet's information office said only, "It's a rumor," when asked about Jiang's death. The official, like many in China, would give only her surname, Li.

Foreign Ministry spokesman Hong Lei refused to comment directly on Jiang, referring reporters at a regular news conference Thursday to the Xinhua report.

The denials follow days of intense online conjecture over whether Jiang, 84, had died or was close to death, fueled by his failure to appear at last Friday's celebration of the 90th anniversary of the ruling Communist Party's founding.

A Hong Kong TV station and Japanese and South Korean media had reported Jiang had died. None of the reports had named sources, and the Hong Kong broadcaster, ATV, retracted the report and apologized to its audience, Jiang and his family Thursday.

While the rumors were suppressed on the mainland, they were widely reported in the semiautonomous Chinese territory that's promised Western-style civil liberties including freedom of speech. The speculation was splashed on the front pages of leading Hong Kong newspapers on Thursday.

The central Chinese government's liaison office in Hong Kong blasted ATV. The Hong Kong China News Agency reported an unidentified official from the office "expressed extreme anger at ATV's serious violation of journalism ethics."

Hong Kong Journalists Association chairwoman Mak Yin-ting said she believed that responsible journalists verify their sources.

"But no one can say their information is 100 percent accurate. Your sources could be wrong," she said.

The Internet speculation sent censors into overdrive to excise the comments.

Searches for "Jiang Zemin" in Chinese or simply "Jiang" — which means "river" — drew warnings on Sina Corp.'s popular Twitter-like service that said the search was illegal. Some posts then began appearing on Sina Weibo about former leader "River" in English.

News that some overseas media had reported Jiang's death whizzed around the social networking site, with some mainland users puzzling over how Hong Kong media could have received the news first.

The government is very secretive about the health of top leaders and is particularly sensitive ahead of a leadership transition that starts late next year at a major Communist Party congress. The death of Jiang, a retired but still very influential figure, could cause some of his proteges to shift allegiances, affecting the jockeying for power among China's rising political elites.

China prefers to keep such machinations behind the scenes as much as possible.

Jiang led China for a dozen years until transferring power to President Hu Jintao in 2002.

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AP reporter Min Lee in Hong Kong and AP researcher Yu Bing in Beijing contributed to this report.

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China reports local governments owe $1.6 trillion (AP)

BEIJING – China's local governments have piled up debts of $1.6 trillion, the national audit agency announced Monday, amid mounting concern Chinese banks might be hurt if borrowers cannot repay loans.

It was the first public accounting of massive borrowing by local governments to pay for construction and other spending. The announcement, following months of speculation about the scale of the debt, might help to mollify worries about possible risks facing banks that also lent heavily to help China ward off the 2008 global crisis.

Analysts say some local governments might be unable to repay loans but a banking crisis is unlikely because China's state-owned lenders are flush with cash and avoided the mortgage-related turmoil that battered Western institutions.

Beijing has flexibility because economic growth is strong and its total government debt is well below that of the United States, Japan and some European economies, said Zuo Xiaolei, chief economist for Galaxy Securities in Beijing.

"But the government must bear the risks in mind and try to prevent the local debts expanding too fast," she said.

The National Audit Office report gave no indication what portion of local government debt might not be repaid. Its total figure was in line with estimates by outside analysts but it was unclear whether that included all government debts.

The audit office said local governments owe 9 trillion yuan ($1.4 trillion) to banks and other lenders and might be responsible for an additional 1.6 trillion yuan ($200 billion) in debt. The disclosure came in a report to China's legislature that was released on the agency website.

"Due to inadequate repayment ability, some local governments can only pay their debts by taking on still more debt," the report said.

UBS economist Tao Wang, in a report this month, said local governments eventually might be unable to repay 2-3 trillion yuan ($300-$450 billion) in loans, equivalent to 4-5 percent of total lending by Chinese banks.

Many local Chinese governments created investment agencies over the past decade to invest in construction and other projects, financed by borrowing from state banks.

An American researcher, Victor Shih of Northwestern University, has estimated total local government borrowing in 2004-09 at 12 trillion ($1.6 trillion).

Bank lending was a key element of Beijing's 4 trillion yuan ($586 billion) stimulus that helped China rebound from the global economic crisis. Beijing provided only about 25 percent of the total. The rest came from local governments, state companies and bank loans.

Regulators began to tighten controls early last year amid warnings local governments were borrowing too much.

A central bank deputy governor, Su Ning, said in March 2010 that banks might face risks if local governments defaulted. But the Finance Ministry and bank regulator later issued a statement saying risks were under control.

Many loans are likely to be repaid because they were invested in projects that will produce taxes and other revenues, analysts say. But they say some were given without required collateral, some borrowing was used for regular spending instead of investment and some governments committed the same future revenues to multiple projects.

China's top state-owned banks are among the world's biggest, with several having more than $1 trillion in assets.

Beijing injected tens of billions of dollars into China's biggest banks over the past decade to clear away mountains of unpaid loans.

"It can't be excluded that the government might remove bad debts from the banks again if there were debt defaults," said Zuo. "But that would be no good for the development of the economy and the banks as well."

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AP researcher Yu Bing contributed.

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National Audit Office report (in Chinese): http://www.gov.cn/zwgk/2011-06/27/content(underscore)1893782.htm

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