Platform company is a company specially established by local government, which implements corporate management, capital orientation and market behavior for local infrastructure. For example, the country moves towards policy behavior, and local governments build their own local cities, transportation bureaus and other enterprises or government transportation construction.
As a platform for the government to commercialize various government behaviors (the government itself directly participates in market behaviors, which is not conducive to management and cannot use sufficient financial leverage), these companies directly participate in economic activities, issue bonds, issue funds, and dock bank financing.
With the rapid development of the number and scale of local government investment and financing platforms, more and more experts question it.
Due to the imperfect corporate governance structure of local government investment and financing platforms, unclear responsibility subjects and irregular operating procedures, at the same time, local governments often obtain credit funds from multiple banks through multiple financing platform companies, resulting in multiple debts.
Banks' overall liabilities and guarantee commitments to local governments are not clear at all, and even local governments are not clear about the liabilities of their financing platforms. Once the project investment income of the investment and financing platform cannot cover the cost, these "hidden debts" will inevitably become explicit, which will put great pressure on local government finances.