Chinese civil servants in a heavily indebted industrial city have found a unique investment opportunity — by lending money to their own local government employer for “guaranteed” annualised returns of as much as 12 per cent.
Since 2015 an online lending platform in Baotou, Inner Mongolia has raised about Rmb1.2bn ($187m) for government projects in the city of 2.9m people. About half of the platform’s clients are government officials, according to people familiar with the financing scheme.
Privately owned NMG Dai, the Chinese abbreviation for Inner Mongolia Lending, raises funds for various government projects. The fund’s main borrower is one of Baotou’s six districts, Qingshan, which has used the cash for environment-related projects such as tree-planting and solar power generation.