China local debt fix hangs on Beijing's wishful thinking

SHANGHAI: China is asserting control over once-chaotic local government financing by banning the use of opaque funding vehicles, but filling the gap with a huge expansion of the fledgling municipal bond market will raise a whole new set of problems.

Chastened by promiscuous local investment in response to the 2008 global financial crisis, Beijing wants to restore discipline as part of its wider economic reforms, but the muni bond market, bedevilled by price distortions and inadequate disclosure standards, is no quick fix.