China’s financial SOEs banned from financing local governments

April 2, 2018

BEIJING – China’s Ministry of Finance has set a red line for State-owned financial enterprises' investment and financing activities to prevent and reduce local governments' debt risks, according to the State newsagency, Xinhua.

Except buying bonds issued by local governments, the State-owned financial enterprises are banned from offering any form of financing for local governments in a direct way or through local State-owned enterprises and institutions, the Ministry said in a notice.

 

In addition, the State-owned financial enterprises are not allowed to set up new local government financing platforms, require local governments to provide guaranty or pay debts illegally, or provide debt fund as capital for local construction projects, government investment funds or public-private partnerships (PPP) projects, according to the notice, the China Daily reported.  www.webershandwick.cn (ATI).