China is hooked on debt, and the policymakers' idea of treating the addiction could make things worse. Chinese officials said two months ago they will make it easier for commercial banks to swap problem loans in overindebted companies for stock, in a maneuver known as a debt-for-equity swap. The plan may allow conversions of up to $155 billion of bad loans, Bloomberg reported, which could help prevent struggling firms from default. This plan could, depending on who you talk to, simply move debt from one party to another, or alternatively incentivize the wrong kind of behavior.
Similar Stories to The Antidote To China's Debt Addiction Could Make Things Worse on Bing News
rbutt@businessinsider.com (Rachel Butt), Business Insider
Sun, 05/29/2016 - 5:01pm
Topics: real housewives chinese bloomberg gordon orr lenovo swire pacific this shanghai august david brown pricewaterhousecoopers in hong kong the financial times international monetary fund imf converting npls communist watch bethenny frankel orr but if china watch debt addiction could make things worse investors swaps swap shares equity market companies government billion firms problem loans worth pocket cost plan stock banks comprehensive wrote zombie small loss allowed conversions party
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