The world of Chinese “vulture funds”, which invest in distressed debt, remains small but the industry is poised for growth. Non-performing loans in the country hit an 11-year high of Rmb1.39tn at the end of March, not including defaults on shadow-bank credit. According to the Financial Times, bad debts are expected to grow as the bill comes due from China’s post-financial crisis debt binge. China’s finance ministry created four asset management companies in 1998 to clean up the commercial banking system and the AMCs remain the dominant players, but small funds are playing an increasingly large role. However, profiting from the bad debt is expected to be more difficult than in the past, with banks and AMCs driving harder bargains.