China is considering stronger action to address risks from local government financing vehicles, with Caixin reporting on a plan to give the businesses cheap funding as debt concerns mount.
The central bank may set up an emergency liquidity tool with banks to provide low-cost funds with longer maturities to LGFVs, Caixin reported on Saturday, without saying where it got the information.
The move, if approved, would give cash-strapped LGFVs access to funds to improve their cashflow and avoid short-term liquidity stress. There are no official figures for the size of LGFV debt, although the International Monetary Fund estimates it was 57 trillion yuan ($7.8 trillion) last year.
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