China's Local Government Bond Market

Author/Editor:

W. Raphael Lam ; Jingsen Wang

Publication Date:

September 28, 2018

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

Local governments play a significant role in China’s public finance and fiscal operations. The size of local government debt has grown rapidly over the past years, exceeding the stock of sovereign debt in China. How does this development compare to other countries and what policies can foster the sound development of the bond markets? This paper finds that despite its rapid growth, the local government bond market is still underdeveloped. Severe impediments—low liquidity, weak credit discipline, structural fiscal deficit in local governments—have become more visible. Reforms to develop a sound local government bond market should harmonize tax and regulations, build liquidity, and advance fiscal reforms to tighten off-budget borrowing and address intergovernmental imbalances.

Series:

Working Paper No. 18/219

Subject:

English

Publication Date:

September 28, 2018

ISBN/ISSN:

9781484378410/1018-5941

Stock No:

WPIEA2018219

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

20

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