China vows to guard financial stability after big-name defaults

Advertisement

BEGIN ARTICLE PREVIEW:

SHANGHAI — China has pledged to step up monitoring of financial misconduct to ensure system stability after a series of high-profile defaults by state-backed companies sent shock waves across the country. China’s corporate defaults have reached 157 billion yuan ($23.9 billion) so far this year and are on track to surpass last year’s record 167 billion yuan. State-owned companies, including miner Yongcheng Coal & Electricity Holding Group, chipmaker Tsinghua Unigroup and Huachen Automotive Group Holdings, account for 40% of the total.A State Council committee on financial stability chaired by Vice Premier Liu He held an emergency meeting on Saturday, and promised action to “avoid a financial system crisis,” calling for “zero tolerance” for corporate misconduct.This year’s default problem has been particularly unnerving to investors in that state-backed companies figure prominently in the trend. Corporate finances deteriorated quickly after China pulled back the financial support extended as part of pandemic-related economic stimulus. Beijing is now determined to prevent any instability.The committee found that a confluence of factors, such as the economic cycle, the economic system and corporate behavior, contributed to the recent surge in defaults.”Fraudulent issuance, disclosure of false information, malicious transfer of assets, and misappropriation of issuance funds will be strictly …

END ARTICLE PREVIEW

READ MORE FROM SOURCE ARTICLE