China's local govts now guarantee US$842b of credit

Shandong Ruyi Technology Group

SHANGHAI: Local government investment arms in China were once considered one of the country’s riskiest groups of borrowers and a time bomb in a creaky financial system.

But in recent years, a growing number of these heavily-indebted entities, known as local government financial vehicles, have emerged as white knights of a troubled private sector, offering guarantees to loans and bonds from garment makers to construction firms.