Private credit for state ends

CHINA ADVISORY - Report 15 Mar 2019 by Andrew Collier

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China is quietly privatizing much of its debt due to an increasing shortage of domestic capital. This will have several outcomes:
* A rise in off-balance sheet financing.
* An increasing division between state firms that obtain state capital and local infrastructure and private companies that rely on private capital.
* A rise in the “implicit obligations” of the state as investors assume greater responsibility by Beijing for most forms of private debt.
* The potential for a default of a significant number of institutions (financial or corporate) that calls into question the safety of Chinese debt.