The recent crisis in China’s real estate market has put the concerns about social instability and the risk of a liquidity crisis in the financial system in the CCP’s face. So how will the CCP solve or at least mitigate the situation? The solution seems to be to pour money into real estate acquisitions. But where will this money come from?

To answer this question, first of all, we need to know that China has two “mysterious” public debt-raising instruments that are not on the official books, namely local government financial vehicles (LGFV) and special local government bonds.