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The Political Economy Of Township Government Debt, Township Enterprises, And Rural Financial Institutions In China, Lynette H. Ong

Lynette H Ong, Dr

This paper sheds light on the ways in which township governments had mobilized resources from local financial institutions, and how failure to repay many of these loans had given rise to sizeable local government debt. Mobilization of resources was done through loans to collective enterprises whose de facto owners were township authorities. Though the enterprises were nominal borrowers, loan transactions would not have occurred in the absence of guarantees by township governments. Another way of financial resource mobilization was by establishing local informal financial organizations that were subject to less strict regulations, and over which township authorities could exercise control. …