China must take action to reduce corporate debt levels, China’s state planner said in a document released during a news briefing in Beijing on Monday.
High debt levels have added to operating difficulties for some Chinese firms, increasing their debt risks and financial risks, the National Development and Reform Commission said.
China will allow firms to develop equity financing and conduct market-oriented debt-to-equity swap process in an orderly way, the document said.
It will also step up checks at state-owned firms in order to reduce debt levels.
The government will also allow firms to go bankrupt according to the law, it said.
In an effort to reduce corporate costs, China will combine deleveraging with overcapacity reductions.