When the the Guangdong International Trust & Investment Corporation (GITIC) filed for bankruptcy early this month, it shook international confidence in the ""ITIC'' sector--corporations that serve as foreign-investment arms of local governments. The decision to let GITIC go under was as political as it was financial. NEWSWEEK has learned that the Guangdong provincial authorities had accumulated what one source called a ""slush fund'' to bail out GITIC, and the day before its collapse a high-level delegation was in Beijing arguing for its survival. ""The decision was made to send a strong message to the market,'' said one informed observer--especially to lenders who threw unsecured loans at ITICs.
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