China’s banking regulator has made another move the reduce risk in financial markets while at the same time providing more leeway in bank loans to local governments, The Wall Street Journal reported. The China Banking Regulatory Commission (CBRC) on Thursday said it will no longer allow trust companies to sell investment products backed by commercial paper. The products allowed banks which held the commercial paper to move it off their balance sheets, and so increase lending activity. Analysts say that the total amount of these products remains low, and the CBRC is acting preemptively. A report issued by Standard and Poor’s said regulators are likely to allow postponing the recognition of losses on some loans to local governments. “In the short term, extending the debt maturities to facilitate payments would…avoid a surge in nonperforming loans,” the report said. “But it is also likely to undermine investors’ confidence for some time to come…and highlight the CBRC’s lack of independence from the government.” The National Audit Office estimated in 2011 that local government debt stood at US$1.7 trillion.