China’s insurance regulatory has cautioned the country’s insurance funds against providing covert funding to local governments, amidst a crackdown on regional debt.
Analysts expect heavy regulatory pressure to keep local government bond issuance at around 4 trillion yuan this year, roughly on par with the 2017 level.
China’s state-run media has called for Beijing’s ongoing deleveraging campaign to be conducted in an “orderly” fashion, with a view to more effectively containing systemic financial risk.
China’s central government appears intent upon keeping a lid on “covert borrowing” by the country’s local governments as part of its ongoing deleveraging campaign.
China’s State Council has reiterated its commitment to the use of debt-equity swaps as a key tool for reducing high levels of corporate leverage, referring to state-owned enterprises specifically as the “priority of priorities.”
China’s biggest asset management company has just launched the country’s first online platform that provides for the trading of distressed debt assets, as Beijing endeavours to clean up the banking sector’s bad loans.
A new report from Haitong Securities warns that an unprecedented volume of Chinese real estate sector debt is set to mature in 2018 and 2019 following a splurge on puttable bonds by developers during the 2015 – 2016 period.
While Chinese households continue to bear a comparatively modest share of national debt, their high savings levels continue to drive up prices in the residential real estate sector.
China’s commercial lenders will find it a challenge to raise their perilously low capital adequacy ratios amidst Beijing’s ongoing shadow banking crackdown, according to Christopher Balding, associate professor of political economics at Peking University.
China is set to become the world’s biggest issuer of local government bonds within the next five years, according to Qiao Baoyun, head of the Academy of Public Finance and Public Policy at the Central University of Finance and Economics.