Local government financing vehicles (“LGFVs”) — companies capitalized and owned by local government and established for the purpose of raising funds for municipal infrastructure construction — emerged in China in the 1980s as a response to the severe constraints on indebtedness by local...

Chengtou bond is the only asset with market prices that can capture the funding cost of Chinese local government debt. In contrast to the U.S. municipal bonds, Chengtou bonds are issued by private corporations but implicitly guaranteed by local and the central governments, which are reflected by...