By 2015, local government entities owed a total of about 18 trillion yuan (about one-third of China's economy), mostly to state-owned banks who had made loans to the local governments "to fund risky land and property deals."Shen Hong, China's Plan for Local Debt Amounts to a Bailout, Wall Street Journal (June 23, 2015). The Chinese central government authorized provinces to issue at least 2.6 trillion yuan ($419 billion) in bonds in 2015 in order to stabilize the financial system. However, demand for provincial bonds from the private market was weak due to inadequate yields, and in May 2015, the central government directed state-owned lenders to buy the local bonds, creating a debt swap akin to a bailout.
