LGFVs Swimming Naked

Local government financing pressures will remain a key obstacle to a recovery in the Chinese economy in 2019. Data from LGFV financial statements reveal severe cash flow difficulties in 1H 2018, compounded by declining credit availability from Beijing’s deleveraging campaign. While the State Council has opted to allow LGFVs to renegotiate debt rather than risk additional defaults, ongoing financial pressure will push the PBOC to ease conditions further.

Posted November 29, 2018
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