China’s biggest financial asset exchange is seeking to increase its sales of bad debt to foreign investors as the country’s volume of non-performing loans continues to rise, the Financial Times reports.
The Qianhai Financial Assets Exchange, which holds assets worth $147 billion, became the first Chinese exchange to sell bad debt to overseas buyers in 2017. A senior figure at the exchange has said that he expects the amount of foreign sales to double this year to over $1.4 billion.
China’s financial system faces a surge of bad loans as regulators force banks to bring once-hidden unpaid debts onto their balance sheets and a credit crackdown restricts the number of domestic funds able to invest in the new credit.
“There is not enough demand in China for the debt coming on to the market. Liquidity at all institutions has shrunk this year,” said Zhan Yuhong, a deputy general manager at Qianhai. “This is why the government is promoting selling NPLs to overseas investors. This is one of the solutions.”