Other Chinese provinces, including Liaoning and Hunan, have also rolled out measures recently to mitigate LGFV debt risks, after President Xi Jinping presided over a Politburo meeting in late April urging local governments to "strengthen debt management, and strictly curb growth in hidden debt".
"When something is classified as systemic risk in China, government officials will try their best to defuse such risk," said Zhai Jianye, general manager of Shoupu Fund Management Co. "The logic of LGFV bond investment is that money will be repaid as long as the government wants to. It's just a matter of how," said Zhou Tingzuo, co-founder of Shanghai-based hedge fund house Ning Yong Fu Fund Management Co.