The Economist with a piece on deleveraging plans in China
The government brought together officials from the finance ministry, the central bank, the banking regulator, a top planning agency & the Chinese Academy of Social Sciences
- This week, a forum in Beijing gathered officials, bankers and academics to sift through the suggestions
- They've homed in on corporate debt
- There will be no rush to deleverage
3 part plan:
- Reducing credit to underperforming state-owned firms or restructuring them in the image of their sleeker private-sector peers. Loans would flow to better firms generating higher returns.
- Equity financing to help replace debt (admitting that's a difficult road - banks will swap some loans to indebted companies for equity stakes instead ... Officials insist that only viable companies will receive this treatment)
- Government fiscal policy to prop up growth, in effect transferring debt from corporate balance-sheets to its own
The Economist finish with:
- Scepticism about whether China will end its credit binge is warranted
- credit issuance has outpaced economic growth by a wide margin, raising overall debt levels
- And China's approach to state firms is inconsistent
The full Economist piece is here, but it may be gated: Coming clean - Plans to rein in credit slowly take shape