State planning commission calls on China to reduce high corporate debt levels

In an effort to reduce corporate costs, China will combine deleveraging with overcapacity reductions.

By: Reuters | Beijing | Published: October 10, 2016 2:02 pm
China, China corporates, China corporate debts, corporate debt levels, Chinese firms, Chinese economy, business news, world market, latest news, Indian express China will allow firms to develop equity financing and conduct market-oriented debt-to-equity swap process in an orderly way, the document said. (File Photo)

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.

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