China will allow local governments to sell bonds for the first time, in a major step towards tackling a looming crisis in local public finances and reining in the shadow banking sector that municipal authorities rely on for funding.
China's Finance Ministry said 10 local governments in mostly wealthy and well-managed provinces and cities like Beijing, Shanghai and Guangdong would be included in a pilot scheme to sell bonds directly, writes the FT's Jamil Anderlini in Beijing.
Until now, provincial and city governments in China have been forbidden from borrowing any money at all, except through a separate pilot scheme under which the central government issues bonds on their behalf and takes responsibility for repayment.
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