IMF issues warning on China corporate debt

The International Monetary Fund warned in a report earlier this month that $1.3tn in corporate debt — or almost one in six of the business loans on Chinese banks’ books — was owed by companies who brought in less in revenues than they owed in interest payments alone. The Financial Times reports the IMF is concerned about the debt issues and in a paper published on Tuesday, James Daniel, the fund’s China mission chief, and two co-authors, warned that Beijing needed a comprehensive strategy to tackle the problem . They warned that planned debt-for-equity swaps and the securitization of non-performing loans could in fact make the problem worse if underlying issues were not dealt with.