China’s Local Government Bond Rush Worsens Liquidity Strain
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Feb 23 2025
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Source: Bloomberg
Local Governments Issue Bonds: China’s local governments are set to issue a record 1.69 trillion yuan ($233 billion) in bonds to refinance hidden debt, with about half aimed at replacing off-balance sheet debt, exacerbating liquidity issues in the financial system.
Impact on Financial Markets: The bond issuance is expected to increase government bond supply and affect banks' liquidity management, as the central bank maintains tight monetary conditions, leading to higher money-market rates and challenges for banks in securing funding.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
