China's Local Government Financing Platforms: A Fortune Turned Misfortune?
China's local government financing platforms (LGFPs) have grown rapidly, causing risks to the financial sector. If not addressed, they could become a problem. To avoid this, revenue and spending imbalances at the local government level need fixing. A system to regulate and supervise local government budgets should be set up. Financial resources from land sales must be sustainable. Local government bond markets should be developed, and financial reforms promoted.