China local government bond issuance declines

Local governments in China plan to issue fewer bonds than last year, which could lead to the central government taking control of its borrowing. According to data compiled by Bloomberg, local governments in China plan to issue 1.08 trillion yuan ($150 billion) in bonds in the first quarter of this year, down 13 percent from the same period a year earlier. The issuances to date indicate even lower levels of borrowing. In the first eight weeks of the year, local government bond issuance has fallen 58 percent from a year earlier. The slowdown in bond issuance by local governments could lead to the central government issuing larger debt instruments to fill the investment gap, according to Ding Shuang, an economist at Standard Chartered. Local governments in China are highly leveraged, like the real estate sector, and this level of debt is seen by some economists as a potential source of a crisis.