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Chinese local governments will be allowed to use part of the money raised from special-purpose bonds to replenish small banks' capital, as the world’s second largest economy tries to defuse bad-debt risks and strengthen small banks’ ability to serve the real economy.
Local governments can use proceeds from the special-purpose bonds to buy convertible bonds sold by some small and medium-sized banks, said the State Council in a meeting on Wednesday.
“We have decided to focus on enhancing the ability of financial services for small and medium-sized enterprises, and . . .
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