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China Grappling With Hidden Debt

China Grappling With Hidden DebtChina Grappling With Hidden Debt

China’s local governments have issued more debt through investment funds designed to skirt financing restrictions so far this year than in all of 2015, leading the central government to crack down on what could potentially lead to an explosion of credit risk, Nekkei reported. Local government financing vehicles are used to raise government funds with bond floats and bank loans. They are also involved in building and running sizable infrastructure projects. Issuance of LGFV bonds, also known as chengtou notes, from January to November totaled 1.7 trillion yuan ($246 billion), compared to the 1.3 trillion yuan or so for the entirety of 2015.

 

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