Chinese Government’s Eased Attitude Towards LGFVs’ Financing Activities Underpins Their Credit Profiles

Financing policies for China’s local government financing vehicles (“LGFVs”) have been eased since 2H2018 due to the dynamic condition of China’s macroeconomy and the financial system. China’s regulatory authorities put risk prevention as their primary goal in 1H2018 and issued several policies aiming to crack down disorderly debt financing. They signalled relaxations in 2H2018, although financing activities remained constrained in the whole year of 2018 given the lagging effect of policy changes and some risks in this sector were exposed.