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CHINA PRESS: China should grant more rights to local governments to issue bonds

in order to increase direct funding and establish a multilevel capital market,

the China Business News reported Monday, citing Xu Zhong, director of People's

Bank of China Research Bureau. Local governments should be able to issue bonds

according to their needs and market demand, and the central government should

relax controls on bond issuance, Xu suggested. The current central approval

system has abused the definition of municipal bonds, he added, and restricted

the issuance of local government bonds. China needs to allow the bankruptcy of

local state-owned enterprises and even local governments to reverse market

expectations that the central government will rescue them, Xu said. (China

Business News)