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China Has 1 Trillion Yuan in Bad Assets Need to Be Restructured
China currently has at least 1 trillion renminbi in financial assets which need to be restructured and dealt with otherwise, according to a symposium on China's financial assets restructuring.
Due to the restraints from the planned economy and the economy overheating in the early nineties, China's state-owned commercial banks has accumulated a large amount of bad loans, which have not only threatened their normal operations but also become a latent danger to China's economic development.
Hu Jingyan, head of the foreign capital department at the Ministry of Foreign Trade and Economic Cooperation, said the restructuring of these bad assets has a monumental significance for China's financial risk, stable economic development and state-owned enterprise reforms.
China has already set up Cinda, Huarong, Changcheng and Dongfang financial asset management companies specifically to restructure the bad assets of banks.
Reportedly, these four financial asset management companies have accepted more than 1.3 trillion renminbi in state-owned enterprise assets from China's four state-owned commercial banks. Stock equity accounts for a quarter of the assets.
China Cinda Asset Management Company, established last April, was China's first financial asset management company. Vice-president, Tian Guoli, said up to the end of last year, the company had accepted 350 billion in bad assets and by this May, it had already completed more than 200 debt for equity swap projects worth approximately 150 billion yuan.
At the symposium, China Xinda Asset Management Company introduced 38 projects for overseas and domestic investors to chose from. Tian Guoli said that they would introduce even more projects in the future and hope to work together with overseas and domestic investors.
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