China plans to strengthen management of local government funding vehicles. The Ministry of Finance and the Banking Regulatory Commission says it will step up efforts to clear up and manage loans with local financing vehicles.
Analysts say the move aims to keep funding vehicle risks under control. Funding vehicles include those set up by local governments through allocating capital, or providing land or equities. The debts are incurred as the companies borrow or provide credit support such as collateral and buybacks.
At present, the government is working on a long-term mechanism to regulate local government debt and prevent financial risks.