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.
China reduced its holdings of US sovereign bonds in November 2017 following an increase of USD$8.4 billion the previous month.
A new study from the IMF claims that China’s ongoing credit boom is the longest on record, posing a significant threat to its financial stability and economic growth.
Provincial governments around China are dialling up their regulation and scrutiny of local government debt at Beijing’s behest as part of efforts to forestall systemic financial risk.
Domestic analysts expect China to maintain stable loan growth this year, after M2 money supply growth dipped to unprecedented lows in 2017.
China will retain its GDP growth target of “around 6.5%” for 2018 according to policy sources speaking to Reuters.
A new paper from the International Monetary Fund concludes that credit stimulus is no longer capable of supporting further growth of the Chinese economy.
The global chief economist of Everbright Securities says that China needs to bring down its housing prices if it hopes to effectively deleverage its economy.
An Indian academic claims that China is using its much vaunted One Belt One Road initiative to engage in “creditor imperialism,” and acquire greater sway over participating countries by providing them with cheap debt.
One of the Chinese central bank’s senior-most officials has called for Beijing to completely abolish its control of local government bond issuance, and allow municipal and county-level authorities to assume full responsibility for repayment.