China tightens controls on local government loans

The new guidelines are comprehensive but the need to sustain economic growth may put pressure on enforcement.

China tightens controls on local government loans

China has tightened rules on bank lending to local government financing vehicles LGFVs, in a bid to constrain their mounting debts. But the new leadership’s desire to showcase its capability to ensure economic growth suggests enforcement of the new rules is questionable.

China Banking Regulatory Commission CBRC unveiled the draft guidelines yesterday. They require commercial banks to strictly control the quality of loans issued to LGFVs and closely monitor the repayment of...

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