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Buildings are seen along the Songhua River in Harbin, in northeastern China.   © Reuters
FT Confidential Research

As local Chinese governments come clean on debt, companies teeter

Property boom helped businesses avoid failure but time is short, FTCR finds

| China

Companies controlled by Chinese local governments have avoided defaulting on their bonds so far. They will not continue to be so lucky.

Officials are taking a regulatory ax to the implicit support that has allowed hundreds of local government financing vehicles, or LGFVs, to stagger on. Rising interest rates and a slowing housing market are compounding their funding problems, and some local governments may even be laying the groundwork for a market failure by admitting to falsifying economic data.

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