In Depth: The Never-Ending Battle to Curb China’s Hidden Debt

Regulators are once again playing whack-a-mole to stamp out practices local government financing vehicles (LGFVs) are employing to evade efforts to curb their borrowings.

Having loosened the reins on local government debt last year to help the economy recover from the impact of the Covid-19 pandemic, authorities this year have resumed their long-standing campaign to control and defuse financial risks. One of their main targets is hidden local government debt and in particular the borrowings of the financing vehicles they control, typically local state-owned investment companies.