China’s push to improve the finances of cash-strapped localities will mean they have less money to spend on big infrastructure projects because for the first time funds from the sale of new local government special bonds are being used to repay old loans.
In March, Beijing said local governments could sell 3.9 trillion yuan ($539 billion) of the new notes this year, money that in the past has almost exclusively used to back public works. But earlier in November, lawmakers decided that starting this year they would use 800 billion yuan from the bond sales to repay older hidden debt each year through 2028.
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