Local governments in China are racing to launch rescue funds worth billions of dollars to bail out state-owned groups after a flurry of high-profile bond defaults that shook international investors, reported the Financial Times.
Public records showed that six Chinese provinces have committed at least RMB 110 billion ($17 billion) to the funds since the end of last year, as a cash crunch among indebted state-owned enterprises hit local economies.
The wave of defaults included companies such as Yongcheng Coal and Electricity Holding Group, which threw the local economy of central province of Henan into crisis when it missed a RMB 1 billion debt payment last year and stopped paying some of its 180,000 workers.
“The entire province has suffered economically because a single SOE failed to make bond payments on time,” said an official in Henan, which started a bailout fund in April.
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