China will likely become the world's....>

CHINA PRESS: China will likely become the world's largest local government bond

issuer in the next five years due to the fast growth of Chinese municipal bonds,

China Daily reported, citing industrial sources and officials. The outstanding

local government bonds, totaling 14.74 trillion yuan (US$2.3 trillion) last

week, may increase by over 50% to surpass the U.S., currently the largest

issuer. The Ministry of Finance is planning to issue special local government

bonds as part of a proactive fiscal policy to stabilise economic growth.

***Comment: Issuing special government bonds is one attempt to curb the

country's invisible local debt growth, stimulated by local government financing

vehicles, while supporting key investment projects to stabilise economic growth.

That said, the local governments' excess funds is a problem that cannot be

solved without a profound reform of the fiscal system.