LGFVs: to default, or not default? Ask Beijing

China’s recent shift towards short-term monetary loosening has failed to arrest a default on a local government debt vehicle in the western province of Xinjiang, renewing concerns over Beijing’s determination to contain systemic risk. The timing of the default, however, is more surprising. Authorities in Beijing have recently loosened their grip on monetary policy in an attempt to shore up the balance sheets of struggling companies, as a trade war with the US threatens the export-…