We are afraid that many local governments in China have yet to formulate a long-term plan on how to guard against liquidity risk and neither do they have a clear idea on how to finance their infrastructure and public welfare projects.

The research team at ANBOUND Consulting believes the local governments in China should learn from their counterparts in the United States on various aspects including prevention of liquidity risk and capital budget management.

The United States have a wealth of experience in managing their local government debt and China can benefit from their experience when it comes to devising long-term investment and financial planning as well as formulating a rational PPP model.

The experience from the United States can help the local government at all levels to defuse the risks of local government debt.