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China Should Allow More Autonomy In Local Bond Issuance

CHINA PRESS
MNI (Singapore)

China should consider allowing prefecture-level cities to issue and repay bonds on their own initiative so they can meet their financing needs more flexibly and improve market pricing, Yicai.com reported citing Ma Guangrong, deputy director of the Institute of Finance and Taxation, Renmin University. Under the current system, many bond quotas are given to regions with relatively high debt risks to ease their fiscal pressure, Ma said. Meanwhile, the interest rates of local government bonds are close to treasury bonds, which fail to reflect the differences in fiscal resources and project risks among different regions, making it difficult for the market to restrain local governments from disorderly borrowing, Ma noted.

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China should consider allowing prefecture-level cities to issue and repay bonds on their own initiative so they can meet their financing needs more flexibly and improve market pricing, Yicai.com reported citing Ma Guangrong, deputy director of the Institute of Finance and Taxation, Renmin University. Under the current system, many bond quotas are given to regions with relatively high debt risks to ease their fiscal pressure, Ma said. Meanwhile, the interest rates of local government bonds are close to treasury bonds, which fail to reflect the differences in fiscal resources and project risks among different regions, making it difficult for the market to restrain local governments from disorderly borrowing, Ma noted.