China’s dilemma over a curious breed of financial firm
Local government financing vehicles, once the motor of growth, are under scrutiny
China’s local-government financiers have a complex identity. Tasked with developing land and doing public works, they act on behalf of, and with approval from, city and provincial authorities. Yet at the same time they represent large companies, known as local-government financing vehicles (lgfvs), which have the ability to raise billions of dollars from global investors. The thousands of lgfvs around the country owed an estimated 53trn yuan ($8.3trn, equivalent to 52% of annual gdp) in debts last year.
This article appeared in the Finance & economics section of the print edition under the headline “Growth v debt”
From the June 4th 2022 edition
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