(Yicai) Nov. 18 -- The CNY12 trillion (USD1.66 trillion) policy China recently unveiled to resolve local governments' hidden debt risks is excellent news for the cultural and tourism industry, according to professionals from the sector.

Local governments will participate in new scenic area projects, including partial investment and special allowances, professionals told Yicai. There will be accounts receivable or deferred revenue if government funds are not fully in place, so enhancing the efforts to cut local government debts will help ease the pressure on hotels and tourism firms, they added.

Many Chinese cultural and tourism companies invest in and integrate local cultural and tourism resources, including scenic spots, transportation, accommodation, and catering. However, several such enterprises with heavy financial burdens are facing difficulties.

Mengjin Cultural Tourism Development Group, a state-backed tourism firm based in Luoyang, China's Henan province, was ruled bankrupt by a court at the end of February. According to the verdict, its liabilities reached CNY90.4 million (USD12.5 million).

In March, the ultra short-term financing notes of Zhenjiang Cultural Tourism Industry Group, which has often issued bonds to raise funds, began circulating on inter-banking bond markets, with an issuance amount of CNY297 million (USD41 million). On June 4, phase one of a tranche of corporation bonds the firm issued to professional investors in a non-public manner began to trade on the Shanghai Stock Exchange.

The new policy to reduce debts can be helpful to local cultural and tourism firms, said Wei Changren, founder of tourism-related financial news website Btiii.com. It is especially helpful to ease debt pressures on firms such as Zhenjiang Cultural Tourism, giving China's local cultural and tourism companies a chance to restructure and improve investments, Wei added.

According to other professionals, Chinese cultural and tourism firms must strengthen their competitiveness when vying for special debt quotas if the regions where they are based have relatively tight overall fiscal budgets.

Editors: Shi Yi, Martin Kadiev