China LGFV Debt May Gain From Removal of Policy Wording on Risk

A rally in bonds issued by Chinese local government financing vehicles may continue, after authorities signaled that the sector’s debt risks may take back seat on a policy agenda focused on reviving growth.

China’s top leaders removed a key reference to regional authorities’ debt woes in the readout of an annual economic policy meeting, the first such omission since 2019. The glaring absence from the Central Economic Work Conference’s statement suggests curbing local governments’ liabilities has become a lower priority for policymakers, following the recent rollout of a debt reprieve program and as Beijing leans more on fiscal spending to ...