ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintIcon Twitter
Caixin

In depth: China's ATMs for infrastructure get squeezed, again

Crackdown on illegal fundraising, anti-corruption campaign threaten financing

The central government has urged local authorities to step up infrastructure investment but emphasizes that local governments must avoid more hidden debt.   © Reuters

The screws are tightening once again on China's local government financing vehicles (LGFVs) even as pressure on them grows to help fund the country's infrastructure stimulus, adding to concerns that debt defaults will increase and further strain cash-strapped local authorities.

A crackdown on illegal fundraising via local financial asset exchanges (FAEs) and an anti-corruption campaign targeting LGFVs and the intermediaries that broker debt sales are threatening one of the few funding channels still widely open to the vehicles after regulators restricted their access to bank loans and made it more difficult to issue bonds. Trust companies have also reined in credit as they become increasingly concerned about whether they will get their money back.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

Discover the all new Nikkei Asia app

  • Take your reading anywhere with offline reading functions
  • Never miss a story with breaking news alerts
  • Customize your reading experience

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more