Local government debt of 36 Chinese cities hit 3.8 trillion yuan (HK$4.8 trillion) in 2012, up 13 percent from 2010, the National Audit Office.
 

It warned some provincial capitals had used new loans to pay back old debts.
 

Shanghai, Guangzhou, Chongqing and Tianjin are among the 36 cities mentioned in the audit report.
 

About 16 cities have a gearing ratio of more than 100 percent, while the highest gearing hit 220 percent.
 

The office warned some provincial capitals are facing high risks as their debt balances are growing too quickly.
 

Five of these cities are covering 38 percent of their old debts with new loans, while 14 have a total overdue loan balance of 18.17 billion yuan.
 

Debts have mainly arisen from expressway and other secondary highway projects, the report said.
 

Bank loans and bonds were the main sources, accounting for 90 percent of the total debt raised.
 

But NAO said some local governments were using unconventional ways to raise funds, posting new risks as the annual rate for these channels are as high as 18 percent.
 

The report also pointed out local authorities had weak management over fund-raising platforms and debt control.
 

Fitch downgraded China's local currency rating in April amid concerns over the country's rising local debt level.

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