FAR EAST CORRESPONDENT — In October, Beijing announced that four city and provincial governments – Shanghai, Shenzhen, Zhejiang and Guangdong – would be allowed to start issuing bonds for the first time in China’s history.  Zhejiang is expected to issue $8 billion yuan in bonds, including half three-year bonds and half five-year bonds. The proceeds are intended to fund infrastructure projects already under construction.

But why now?  What was the impetus for this unusual step?

Quite simply, it’s a financial pacifier – recent central government policies aimed at cooling down real estate have hurt local governments, who rely on land sales and development fees as their most important sources of revenue.  As these revenues fall, local governments will become increasingly desperate to find other means to finance infrastructure projects and social services. Read more from Eve Cary in The Diplomat.