China has tripled the quota for bond sales by local governments to Rmb1.5tn ($240bn) in a bid to shunt some of their hefty debts back on balance sheets at lower rates of interest. Ultimately this is set to reach Rmb3.5tn, according to local media.
Local governments have racked up huge debts, largely off-balance sheet, as they went on spending binges designed to promote growth and gild the reputations of officials. Borrowing through 10,000 local government finance vehicles was nearly $3tn, according to a government survey published in December 2013.
Economists broadly welcomed the move, saying it created more transparency and enabled local governments to roll over short-term maturing loans into government bonds, which cost less to service.
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