China’s local governments will sell $206 billion to repay financing debt
China economy
China is in discussion to allow local governments to sell 1.5 trillion yuan ($295.9 billion) of special financing bonds to help with debt repayment for 12 regions, according to a report by Caixin.
The regions involved, including Tianjin, Guizhou, Yunnan, Shaanxi, and Chongqing, are under increased pressure to pay off local government debt. Caixin published a report on Saturday without citing the source of the data.
According to the report, the Chinese central bank may establish a special purpose unit alongside banks to offer long-term, low-cost liquidity to local government finance units. According to the statement, the anticipated actions should assist local government financial vehicles (LGFVs) in lowering liquidity risks.
China requests more loans and the reduction of debt risk as its problems worsen.
One of the biggest dangers to the stability of the Chinese economy and its financial system is the debt of LGFVs and other off-balance sheet issuers. The problem has previously been referred to as one of China's “major economic and financial risks” by President Xi Jinping.
As another indication of how authorities were attempting to address financial threats, the government started a round of nationwide inspections to determine how much money local governments owed, according to a June article by Bloomberg News.
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China’s top decision-making body, the Politburo of the ruling Communist Party, announced in July that it will take a series of steps to address local government debt.
(With inputs from agencies)
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