Resolving China’s Corporate Debt Problem

Resolving China’s Corporate Debt Problem PDF

Author: Wojciech Maliszewski

Publisher: International Monetary Fund

Published: 2016-10-14

Total Pages: 43

ISBN-13: 1475545282

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Corporate credit growth in China has been excessive in recent years. This credit boom is related to the large increase in investment after the Global Financial Crisis. Investment efficiency has fallen and the financial performance of corporates has deteriorated steadily, affecting asset quality in financial institutions. The corporate debt problem should be addressed urgently with a comprehensive strategy. Key elements should include identifying companies in financial difficulties, proactively recognizing losses in the financial system, burden sharing, corporate restructuring and governance reform, hardening budget constraints, and facilitating market entry. A proactive strategy would trade off short-term economic pain for larger longer-term gain.

Resolving China's Zombies: Tackling Debt and Raising Productivity

Resolving China's Zombies: Tackling Debt and Raising Productivity PDF

Author: W. Raphael Lam

Publisher: International Monetary Fund

Published: 2017-11-27

Total Pages: 26

ISBN-13: 1484331931

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Nonviable “zombie” firms have become a key concern in China. Using novel firm-level industrial survey data, this paper illustrates the central role of zombies and their strong linkages with stateowned enterprises (SOEs) in contributing to debt vulnerabilities and low productivity. As a group, zombie firms and SOEs account for an outsized share of corporate debt, contribute to much of the rise in debt, and face weak fundamentals. Empirical results also show that resolving these weak firms can generate significant gains of 0.7–1.2 percentage points in long-term growth per year. These results also shed light on the ongoing government strategy to tackle these issues by evaluating the effects of different restructuring options. In particular, deleveraging, reducing government subsidies, as well as operational restructuring through divestment and reducing redundancy have significant benefits in restoring corporate performance for zombie firms.

Global Waves of Debt

Global Waves of Debt PDF

Author: M. Ayhan Kose

Publisher: World Bank Publications

Published: 2021-03-03

Total Pages: 403

ISBN-13: 1464815453

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The global economy has experienced four waves of rapid debt accumulation over the past 50 years. The first three debt waves ended with financial crises in many emerging market and developing economies. During the current wave, which started in 2010, the increase in debt in these economies has already been larger, faster, and broader-based than in the previous three waves. Current low interest rates mitigate some of the risks associated with high debt. However, emerging market and developing economies are also confronted by weak growth prospects, mounting vulnerabilities, and elevated global risks. A menu of policy options is available to reduce the likelihood that the current debt wave will end in crisis and, if crises do take place, will alleviate their impact.

China's Superbank

China's Superbank PDF

Author: Henry Sanderson

Publisher: John Wiley & Sons

Published: 2013-01-22

Total Pages: 228

ISBN-13: 1118176367

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Inside the engine-room of China's economic growth—the China Development Bank Anyone wanting a primer on the secret of China's economic success need look no further than China Development Bank (CDB)—which has displaced the World Bank as the world's biggest development bank, lending billions to countries around the globe to further Chinese policy goals. In China’s Superbank, Bloomberg authors Michael Forsythe and Henry Sanderson outline how the bank is at the center of China's domestic economic growth and how it is helping to expand China's influence in strategically important overseas markets. 100 percent owned by the Chinese government, the CDB holds the key to understanding the inner workings of China's state-led economic development model, and its most glaring flaws. The bank is at the center of the country's efforts to build a world-class network of highways, railroads, and power grids, pioneering a lending scheme to local governments that threatens to spawn trillions of yuan in bad loans. It is doling out credit lines by the billions to Chinese solar and wind power makers, threatening to bury global competitors with a flood of cheap products. Another $45 billion in credit has been given to the country's two biggest telecom equipment makers who are using the money to win contracts around the globe, helping fulfill the goal of China's leaders for its leading companies to "go global." Bringing the story of China Development Bank to life by crisscrossing China to investigate the quality of its loans, China’s Superbank travels the globe, from Africa, where its China-Africa fund is displacing Western lenders in a battle for influence, to the oil fields of Venezuela. Offers a fascinating insight into the China Development Bank (CDB), the driver of China's rapid economic development Travels the globe to show how the CDB is helping Chinese businesses "go global" Written by two respected reporters at Bloomberg News As China's influence continues to grow around the world, many people are asking how far it will extend. China’s Superbank addresses these vital questions, looking at the institution at the heart of this growth.

The Reformability of China's State Sector

The Reformability of China's State Sector PDF

Author: Guanzhong James Wen

Publisher: World Scientific

Published: 1997

Total Pages: 520

ISBN-13: 9789810226558

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China has achieved alarming success in accelerating the economic growth rate since it started economic reform about 16 years ago.However, its state sector is still running severe deficits. Even though its productivity might be improved since the reform started, its financial situation, nevertheless, has been worsening mainly as a result of increased competition from the rapidly expanding non-state sector. Therefore, the reform of this sector has become an urgent problem.All the papers collected in this book are closely related to the various issues that the reform of the state sector has to solve.Among the contributors are Professor Merton H Miller, a Nobel laureate and expert on firm finance and governauce, Mr Ji Lin, the vice president of the Chinese Academy of Social Sciences, Dr Justin Y Lin, the director of Center of China's Economic Research at Beijing University, Professor Gang Fan, the well-known Chinese Economist and vice director of the Institute of Economic Research at the Chinese Academy of Social Sciences, Professor Guoqiang Tian, an expert on mechanism design at Texas A & M University, and many other researchers and professors from China and the North America's research institutes and universities. Therefore, this book will be extremely useful and relevant to those economists as well as government decision-makers working in the field of the transitional economy.

Corporate Bankruptcy Law in China

Corporate Bankruptcy Law in China PDF

Author: Natalie Mrockova

Publisher: Bloomsbury Publishing

Published: 2021-01-28

Total Pages: 384

ISBN-13: 1509932453

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This fascinating study uses qualitative and quantitative data and insights from interviews with judges, lawyers, government officials, entrepreneurs, bankers, consultants, and academics in China and abroad, to provide a new perspective on the problems that have hindered the implementation of the Enterprise Bankruptcy Law in China, and recent attempts at reform. The analysis provides unique insights into China's business world and its interaction with the judicial and political system in China. In addition, the book also provides important information about how the Enterprise Bankruptcy Law affects foreign companies, agencies and governments that are active in China. The author draws on empirical data, decided cases and her experience of how the law and surrounding practices deal with foreign stakeholders whose interests are affected by corporate bankruptcy in China. The book will improve understanding of how China's corporate bankruptcy law has been used in practice, what has limited its practical effectiveness, whether it is desirable for the law to be used more readily in China, and the possible options for its reform.

The Handbook of Global Shadow Banking, Volume II

The Handbook of Global Shadow Banking, Volume II PDF

Author: Luc Nijs

Publisher: Springer Nature

Published: 2020-06-30

Total Pages: 759

ISBN-13: 3030348172

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This global handbook provides an up-to-date and comprehensive overview of shadow banking, or market-based finance as it has been recently coined. Engaging in financial intermediary services outside of normal regulatory parameters, the shadow banking sector was arguably a critical factor in causing the 2007-2009 financial crisis. This second volume explores three particular domains of shadow banking. The first domain deals with the macro-economic fundamentals of the respective shadow banking segments: Why do they exist, what problems do they solve and why are some of their embedded risks so persistent? The second domain captures the global dimensions of shadow banking markets, reviewing the particularities and specifics of various shadow banking systems around the world. Volume II concludes with an extensive overview of how the sector has changed since the financial crisis, focusing on regulatory arbitrage, contract imperfection and governance. Closing on unresolved issues and open-ended questions that will no doubt remain prominent in the shadow banking sector for years to come, this handbook is a must-read for professionals and policy-makers within the banking sector, as well as those researching economics and finance.

Making Sense of China's Economy

Making Sense of China's Economy PDF

Author: Tao Wang

Publisher: Taylor & Francis

Published: 2023-03-28

Total Pages: 338

ISBN-13: 1000861317

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For years, China’s transformation from one of the world’s poorest nations was lauded as a triumph that lifted hundreds of millions of people out of poverty. There were always questions about data reliability and growth sustainability, but the general views on China have recently taken a decidedly sour turn. Concerns abound about state interference in the economy, an ageing population, and high debt level. Making Sense of China's Economy untangles China’s complex economic structure, evolving issues and curious contradictions, and explains some key features of this most puzzling of global economic powerhouses. This book reveals how factors such as demographics, the initial stage of development in 1978, the transition away from full state ownership and central planning, the dual urban-rural society, and a decentralised governance structure have combined to shape the economy, its development and its reforms. It shows how the pragmatic and adaptive nature of China’s policymaking upends familiar perspectives and hinders simple cross-country comparisons. The book also explores crucial topics including the property market, debt accumulation and environmental challenges. In this book, Tao Wang innovatively weaves the multiple strands of China’s economy into a holistic and organic tapestry that gives us unique insights from both a Chinese and an international perspective. This book is critical reading for business leaders, investors, policymakers, students, and anyone else hoping to understand China’s economy and its future evolution and impact, written by a specialist who has studied the country from both inside and out.

Credit Booms—Is China Different?

Credit Booms—Is China Different? PDF

Author: Ms.Sally Chen

Publisher: International Monetary Fund

Published: 2018-01-05

Total Pages: 22

ISBN-13: 1484336852

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Strong Chinese output growth after the Global Financial Crisis was supported by booming credit. This credit boom carries risks. International experience suggests that China’s credit growth is on a dangerous trajectory, with increasing risks of a disruptive adjustment and/or a marked growth slowdown. Several China-specific factors—high savings, current account surplus, small external debt, and various policy buffers—can help mitigate near-term risks of a disruptive adjustment and buy time to address risks. But, if the risks are left unaddressed, these mitigating factors will likely not eliminate the eventual adjustment, but make the boom larger and last longer. Hence, decisive policy action is needed to deflate the credit boom safely.

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