Debt on a downward spiral: China’s LGFVs

Analysts fear that defaults in the shadow banking space could push into public bond markets. Will Beijing be able to implement reform?

China’s local governments have a ballooning debt problem that cries out for urgent resolution, but analysts suggest that this would be a herculean task. If the problem worsens, it will affect banks, interest rates and GDP growth in China, as well as offshore bonds issued by government-owned companies.

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