Local Debt Swap Upsets Supply and Demand in the Chinese Credit Market

Business Times: Explosive local government debt issuance threatens China central bank's easing efforts

Heavily indebted local governments seeking to refinance expensive debt have issued more than 600 billion yuan (S$129 billion) of municipal bonds in the past month - more than in all of 2014.

...Nomura estimates the municipal bond market will grow 1,000 per cent to 12.1 trillion yuan by 2020 - larger than the size of the entire treasury market now.

The People's Daily sees room for more monetary easing.

iFeng: 人民日报：货币政策还有空间 稳健基调不变

Recently released "State Council on vigorously promote public entrepreneurial innovation and a number of policy measures Peoples opinions "to use a lot of space for many small and medium enterprises and create off their planning the funding. For example, support for start-ups in line with the conditions of listing or issuing commercial paper financing, and to encourage start-ups to raise funds through the bond market; support the development of Internet banking, guide and encourage the public to raise financing platform specification development; relaxation of foreign investment restrictions venture capital fund to encourage Chinese and foreign joint development venture capital organizations.

"We are solving the problem of financing there is another fundamental ideas, that can provide direct financing and develop capital markets." Dong Teng further pointed out that with the entrepreneur as the representative of the majority of SMEs, to continue to guide debt market, equity form a reasonable market support, especially private equity market's focus on playing an active role.

Experts said that a variety of risks and credit funds start-ups existence itself there is a natural haven demand contradictions, so in an appropriately tight monetary policy background, to develop multi-level capital market, so that the state-owned capital, private capital and even foreign capital actively involved, for the majority of enterprises can truly have "water to quench their thirst."