Chinese municipal debt, identified as the region's No. 1 financial risk, has seen a significant decrease in premium as short-term bonds issued by China's local government financing vehicles (LGFV) have rallied. Beijing's support for LGFV securities has led to increased issuance and market activity. However, concerns about the long-term financial health of LGFV bonds persist. Additionally, China has taken measures to address local government debt risks, including halting problematic public-private partnerships and accelerating the issuance of government bonds.

China's Financial Risk Management