IMF Working Papers

Resolving China’s Corporate Debt Problem

By Wojciech Maliszewski, Serkan Arslanalp, John C Caparusso, Jose M Garrido, Si Guo, Joong S Kang, Waikei R Lam, Daniel Law, Wei Liao, Nadia Rendak, Philippe Wingender, Jiangyan Yu, Longmei Zhang

October 14, 2016

Download PDF

Preview Citation

Format: Chicago

Wojciech Maliszewski, Serkan Arslanalp, John C Caparusso, Jose M Garrido, Si Guo, Joong S Kang, Waikei R Lam, Daniel Law, Wei Liao, Nadia Rendak, Philippe Wingender, Jiangyan Yu, and Longmei Zhang. Resolving China’s Corporate Debt Problem, (USA: International Monetary Fund, 2016) accessed November 23, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Corporate credit growth in China has been excessive in recent years. This credit boom is related to the large increase in investment after the Global Financial Crisis. Investment efficiency has fallen and the financial performance of corporates has deteriorated steadily, affecting asset quality in financial institutions. The corporate debt problem should be addressed urgently with a comprehensive strategy. Key elements should include identifying companies in financial difficulties, proactively recognizing losses in the financial system, burden sharing, corporate restructuring and governance reform, hardening budget constraints, and facilitating market entry. A proactive strategy would trade off short-term economic pain for larger longer-term gain.

Subject: Banking, Credit, Credit booms, Financial institutions, Financial sector policy and analysis, Government liabilities, Loans, Money, Public financial management (PFM), Solvency

Keywords: Bond market, Construction boom, Corporate Debt Overhang, Coverage ratio, Credit, Credit boom, Credit booms, Credit efficiency, Credit financing, Credit growth, Global, Government liabilities, Hardening Budget Constraints, Loans, Market forces, People's Bank of China, Restructuring, Shadow credit product, Solvency, WP

Publication Details

  • Pages:

    43

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2016/203

  • Stock No:

    WPIEA2016203

  • ISBN:

    9781475545289

  • ISSN:

    1018-5941

You May Also Be Interested In...

Sierra Leone: 2024 Article IV Consultation and Request for a 38-Month Arrangement Under the Extended Credit Facility-Press Release; Staff Report; Staff Statement; and Statement by the Executive Director for Sierra Leone

November 22, 2024

Implementing Risk-Based Solvency for Insurers—Lessons from Kenya, Mexico, and South Africa

November 22, 2024

Global Contagion of Financial Reforms

November 22, 2024

Bilateral Trade in Services and Exchange Rates: Evidence of Dominant Currency Pricing

November 22, 2024