Thursday, May 22, 2014
China Opens Debt Window For Local Governments
Thu., May 22, 2014
China will allow local governments to sell bonds for the first time in two decades in a big step towards tackling a looming crisis in public finances and reining in the shadow banking sector that municipal authorities rely on for funding, the Financial Timesreported. China’s finance ministry said 10 local governments in mostly wealthy and well-managed provinces and cities including Beijing, Shanghai and Guangdong, would be included in a pilot scheme to sell bonds on their own. Beijing is hoping that issuing bonds directly will allow local authorities to better manage their finances and dissaude them from tapping the high-interest short-maturity shadow banking sector whose ballooning growth is threatening financial stability.