The northern Chinese city of Baotou has raised more than RMB 1.2 billion ($187 million) from its own residents since 2015 to fund government projects, the Financial Times reports. The heavily indebted industrial city also recently revised down its 2017 revenues by 49% after admitting to adding “fake” sources of income.
The unusual method of fundraising-which has been dubbed P2G, or peer-to-government-was done through an online lending platform called NMG Dai, a Chinese abbreviation of Inner Mongolia Lending. The platform offered investors “guaranteed” annual returns of up to 12%.
Around half the money raised through NMG Dai came from civil servants in the Baotou government, sources told the FT. The fund’s largest borrower was Qingshan, one of Baotou’s six districts, which used the capital for environmental projects such as tree-planting and solar power generation.