Determinants of Chinese local government bond spreads

How come that Chinese local government bond yields are different from Chinese central government bond yields - despite that the central government guarantees local government debt?
My hypothesis is that provincial economic conditions should not matter for local government bond spreads given that the central government guarantees local debt. To test my hypothesis I analyzed whether provincial economic conditions can explain the central-local spreads of 2,680 Chinese local government bonds issued during 2015-2017 - bonds equal to 21% of Chinese Q3 2017 GDP.

My findings show that some indicators of provincial economic conditions explain local government bond spreads, although this finding is against my hypothesis. You can read the whole paper here: https://goo.gl/5SY5d1.

The below photo is from University of Pennsylvania's Symposium on Contemporary China, where I had the opportunity to present, and get feedback on, my research.