China unveiled guidelines on Monday to reduce rising corporate debt levels which some analysts fear could destabilize the worlds second-largest economy.
The government will take a multi-pronged approach to cutting company debt, including encouraging mergers and acquisitions, bankruptcies, debt-to-equity swaps and debt securitization, according to guidelines issued by State Council, or the cabinet.
Corporate China sits on $18 trillion in debt, equivalent to about 169% of gross domestic product (GDP).
International institutions have warned Beijing to stop financing weak firms, especially inefficient state-owned enterprises, which tend to crowd out the private sector.
They also say the government needs to allow more defaults …
Read the full article at: http://fortune.com/2016/10/10/china-corporate-debt/