China media reportedly relaxed the regulation so that banks can purchase local bonds in full, the Chinese media reported one after another on 4th. The Chinese government aims to speed up the pace of issuing municipal bonds, promote investment in infrastructure, and reduce the negative effects of the US-China trade dispute on the economy. However, the concern that the local debts will expand will also increase.
The Bank of China Insurance Regulatory Committee supervising financial institutions notified banks and abolished the provision that determines the amount of money that banks can possess up to 20% of the issued amount of local bonds issued by local governments.
In late July, the Chinese government decided on a policy to hasten the use of local bonds for infrastructure investment, which was set at 1.35 trillion yuan (about 22 trillion yen) this year and urged to use up the frame by October.
Xi Jinping (Shichinpin) leadership ...