China’s deleveraging drive will turn its attention to lending disguised as equity investment, Caixin Global reported from the Economic Summit of the China Development Forum, in a bid to continue to reduce state-owned enterprises (SOEs) leverage ratios.
Li Yang, president of the National Institution for Finance & Development, said yesterday that the practice of hiding lending by presenting it as equity investment could be a problem for the future and will should be dealt with by the government’s ongoing deleveraging campaign.
Authorities are hoping to significantly cut SOE’s leverage ratios this year, which have continued to rise in recent years due to SOEs privileged access to bank loans. Li described this issue to be “crucial” to achieving reform and stability in the country’s financial system.
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