If the Chinese government is able to reach its economic growth target of 5.5 per cent this year, it will be due in part to retail investors such as Jane Song.
In May, Song invested Rmb200,000 ($29,600) in a fixed-income wealth management product issued by a local government financing vehicle in eastern Shandong province. A financial adviser in Shanghai, she was undeterred by the growing reluctance of bigger investors to back LGFVs, which play a vital role in funding infrastructure development across China.
“If the WMP defaults, the local government will have trouble accessing credit in future,” said Song, who expects to get 8.8 per cent interest on the “medium risk” product. “They are not going to let that happen.”
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