NPC deputy suggests municipal bonds to boost urbanization

Zhou Xuedong, president of the Nanjing branch of the People's Bank of China, the central bank and also a deputy to the National People's Congress, the top legislature

To promote urbanization，there is an unavoidable question to answer - where the money comes from, or how do we set up the financing mechanism.

The need to raise funds does exist and is huge. We need to find multiple solutions. In the past, indirect financing played an important role.

But there are problems with relying on indirect financing. I think direct financing also has a role to play in driving urbanization. We need to do some exploration into setting up a financing mechanism.

There are a lot of debates on local financing platforms. I have also done some research on local financing platforms in Jiangsu province and know something about this issue.

I think we need to view local financing platforms objectively.

On the one hand, there are some risks involved with local financing platforms especially in areas where local governments do not have enough revenue but have made some guaranties.

On the other hand, the function of local financing platforms should not be downplayed. Local financing platforms have played a great role during the global financial crisis, helping China's economy lead in recovering. There have been no defaults yet among local financial platforms in Jiangsu province where I live and work. These financial platforms have generated a bunch of good assets.

We have realized that we need a normative financing channel for urbanization. Financing is needed to improve infrastructure and to build public welfare projects. We need to explore direct financing channels, especially the bond market.