China’s Financial Planning: Could Local Governments Sell Bonds?

money transfer comparison table

Recent news has revealed that preliminary plans have been drawn by China’s financial ministry that would potentially allow some local governments to sell bonds to investors.

These sales would occur on a purely trial basis but would aim to boost the local authority’s ability to make repayments.

The news offers some comfort to growing concerns that recent activity within China’s finances could lead to their third banking bailout in the previous 20 years alone. The activity in question is that of banks reclassifying 2.1 trillion yuan as normal corporate credit, a decision which led to a 7.1 trillion yuan liability fall for local governments and authorities.

China’s recovery from the financial crisis was driven by record lending, of which a staggering 30% could develop problems.

The decision to trial the use of selling municipal bonds is therefore designed to prevent China from falling back into another financial crisis, as it will help to give them the means to raise funds needed for future investments – such as for infrastructure.

The plans will not affect all local governments but will be trialled by only select areas to begin with, meaning that the effects may not be felt for some time.

Whether China’s provisional plans will have the desired effect remains to be seen but the decision to trial this venture has at least given some hope to those worried about the state of China’s finances.

Transfer Money to China

If you are looking to invest in China, think carefully about how you will be transferring money there. Foreign currency exchange rates quoted by banks are almost always worse than the exchange rates available through specialist currency dealers.

So if you are sending money to China – which you will inevitably have to do if you are looking to make a property investment, be sure to compare the market before you buy your overseas currency

Company Details

China’s Financial Planning: Could Local Governments Sell Bonds?

Get a quick quote

Open Account with Moneycorp

Moneycorp are located at:
The Zig Zag Building, 70 Victoria Street, Greater London, SW1E 6SQ, United Kingdom

Get a Quick Quote

Newsletter Signup to CMT

Sign up to our foreign exchange newsletter to receive news updates directly by email

Compare Money Transfer will not Share your details!

Bank Exchange Rates Comparison

High St Bank Exchange Rate

All Rights Reserved: Copyright 2006 - 2018 Compare Money Transfer Limited offering FCA Regulated Suppliers - 34 New House, 67-68 Hatton Garden, London, EC1N 8JY. +44 (0) 843 357 4882