BloombergAn adviser to China’s central bank urged authorities to take measures to prevent “systemic risks” from the failure of local government borrowing platforms, and warned of a “chain reaction” should defaults be allowed to damage market confidence. Stronger LGFVs could also seek to go public or acquire listed firms to boost their financing abilities, he said. However, Ma said that government intervention is still needed to prevent “systemic financial risks” and local governments should also take on some responsibility to come up with measures to address hidden debts. A similar incident last year briefly jolted China’s bond market as well. LGFVs have 8.5 trillion yuan of notes outstanding onshore and US$69.8 billion in offshore markets, data compiled by Bloomberg showed.
