As China’s Growth Slows, Banks Feel the Strain of Bad Debt
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A construction site in Beijing on Friday. China’s total local-currency loans have more than tripled since the start of 2009. CreditNicolas Asfouri/Agence France-Presse — Getty Images
HONG KONG — For Chinese banks, the decision to lend to companies like Bohai Steel was for years a no-brainer. Lenders took heart from its state backing, which appeared as solid as the millions of tons of steel pipes that rolled off its production lines each year.
That ironclad image is now tarnished. Plunging demand and a worsening glut in production capacity have left Bohai Steel struggling to repay as much as $30 billion in debt. Worried creditors — more than 100 of them — are locked in negotiations with the company and local officials…
As China’s Growth Slows, Banks Feel the Strain of Bad Debt
