Media Coverage：CFA Features CSPI Ratings ‘Credit Commentary on China’s Public Finance Landscape
On 1 July 2024, CSPI Ratings is pleased to see that our perspectives on Chinese public finance landscape, as discussed in "Non-rating Action Commentary: China Is Reshaping Its Public Debt Structure," have been recommended by the CFA (Chartered Financial Analyst) Institute.
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【Recap】CSPI Ratings：China is Reshaping Its Public Debt Structure
On 30th May 2024. As recent developments in China's public finance continue to capture global attention, notable topics such as the issuance of ultra-long special government bonds, adjustments in the debt structure of China, evolving credit profiles of LGFVs (Local Government Financing Vehicles), and deepening fiscal and tax system reforms have come to the forefront. To provide international investors with a comprehensive understanding of these critical issues on the credit landscape of China, CSPI Ratings held a live webinar (In English): China's Public Finance: Reshaping the Debt Structure. Mr. Zuo Yiming (Jameson Zuo), Director of Public Finance at CSPI Ratings, led the webinar, which attracted numerous international investors. Through Mr. Zuo's expert insights, attendees gained new understanding and perspectives on China's public finance debt.
For replay video please click this YouTube link: Live Webinar: China is Reshaping its Public Debt Structure
On 13th May 2024, the Financial Times published an article titled "China Fires Starting Gun on $140bn Debt Sale to Boost Economy," providing a comprehensive overview of the arrangements surrounding the issuance of China's ultra-long special government bonds. The article features an in-depth analysis by Mr. Zuo Yiming (Jameson Zuo), Director of CSPI Ratings, on the arrangements for the issuance of these ultra-long special government bonds.
Non-rating Action Commentary: China Is Reshaping Its Public Debt Structure
On 8th May 2024, CSPI Ratings published a credit commentary titled " China Is Reshaping Its Public Debt Structure". The main points are as follows:
- The future evolution of China's public sector debt will be guided by a strategic framework characterized by the active increase of debt by the central government (CG), appropriate expansion of direct debt by local governments (LGs), and rigorous approaches to control and resolve LG implicit debt.
- CG's utilization of ultra-long special bonds as a key mechanism for increasing leverage is projected to raise CG's debt ratio by approximately 5 percentage points in the long run.
- The overall fiscal equilibrium of LGs will be upheld while deficit and debt pressures persist.
- Resolving the short-term fiscal challenges and debt pressures of LGs necessitates a combination of augmenting revenue streams, reducing expenditures, and bolstering central transfer payments. However, the long-term solution lies in fundamental fiscal and tax system reforms.
- The prolonged strategic maneuvering between the central and local governments serves as the fundamental basis for debt resolution.
- The implementation of the "Package of Debt Resolution Schemes" has bolstered the government's accountability in managing general debt, receiving widespread recognition in the market as a confidence boost for LGFVs.
- As the strategic interactions between the central and local governments persist, the future landscape suggests that commercialized state-owned enterprises may emerge as the primary drivers of local leveraging efforts.
CSPI Ratings Spoke at HKIFA Seminar ：China Bond Market Development
On 9th May 2024, CSPI Ratings participated in a Hong Kong Investment Funds Association (HKIFA) seminar. Mr. Jameson Zuo, the Director of Ratings at CSPI Ratings, attended the seminar and delivered a theme speech entitled "China Is Reshaping Its Public Debt Structure".
The main points are as follows:
- Central Government Takes the Lead in Restructuring China's Public Debt Landscape
- The Local Government Direct Debt to Maintain Growth with Taxation Reform Being a Key to Improve Fiscal Sustainability
- Implicit Debt Resolution Alleviates LGFV Liquidity Risk with Strategic Maneuvering Between CG and LG to Continue
About CSPI Ratings
CSPI Ratings is an international credit rating agency based in Hong Kong, China. Licensed by the Hong Kong Securities and Futures Commission in 2012, CSPI Ratings combines world-class credit analysis with a unique perspective on the emerging world to provide globally benchmarked credit ratings and original credit research for global capital markets.
CSPI Ratings is a member of the China Securities Credit Investment Co., Ltd. (CSCI), a nationwide comprehensive credit service organization founded by 35 leading financial institutions in China. CSPI Ratings is an international brand wholly owned by CSCI Pengyuan, China's leading domestic credit rating agency. From 2012 to 2022, CSPI Ratings had operated under the well-known brand name " Pengyuan International".
About CFA Institute
The mission of CFA Institute is served by generating value for investment management professionals and engaging with the investment industry to advance ethics, market integrity, and professional standards of practice, which collectively contributes value to society.
In 1947, analyst societies of Boston, Chicago, New York, and Philadelphia joined forces in realizing their shared commitment to bringing higher standards to the investment profession. On 11 June 1947, a national federation was formed and together these pioneer societies defined the role of the investment professional as one steeped in research and critical thinking.
The Singapore society launched in 1987, the first society outside of North America, thereby beginning the international expansion of the CFA Society network, which now links more than 190,000 members in 160 markets around the globe.
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Email: globalservice@cspi-ratings.com
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