China to further reduce SOE debts

Updated 2018-02-07 23:44:01 Xinhua

The State Council Wednesday unveiled an array of measures to further reduce leverage of state firms in its latest effort to rein in financial risks.

China will provide stronger support for debt-to-equity swaps, promote mixed-ownership reform, and improve policies on business reorganizations and bankruptcy, said a statement released after an executive meeting chaired by Premier Li Keqiang.

State-owned enterprises will continue to be a priority in the deleveraging campaign, and the work should be carried out via market-oriented, law-based means, according to the statement.

The meeting agreed that positive progress was made last year as corporate leverage ratios ended their gaining streak.

The debt-to-asset ratio of industrial enterprises with annual turnover more than 20 million yuan (3.18 million U.S. dollars) went down to 55.5 percent at the end of 2017, from 56.1 percent a year earlier. The ratio for state-controlled firms stood at 60.4 percent.

Debt-to-equity swap programs were highlighted for SOE deleveraging during the meeting.

The government will widen the channel for private capital into debt-to-equity swaps of SOEs. Equity investment institutions will be encouraged to participate in the process, with measures to allow the establishment of private equity funds focused on debt-to-equity swaps.

Financial institutions including banks, state capital investment companies and insurers will be supported to conduct debt-to-equity swaps by using existing units and setting up new departments.

There will be targeted guidelines from the government to improve the quality of debt-to-equity swaps and push related deals to come into effect as soon as possible.

Measures can also be expected to improve corporate governance. A debt control mechanism will be established, and corporate capital can be replenished by additional share offering and bringing in strategic investors. Mixed-ownership reform will be promoted.

Policies on debt restructuring and bankruptcy will also be improved. Government, enterprises, and banks will share losses from the bankruptcy of debt-ridden, loss-making "zombie enterprises."

Also in the News

Nicole Kidman Recalls Oscar Glory: Loneliest Time
Showbiz2016/06/16 13:58August 21 2018 10:15:53

Nicole Kidman Recalls Oscar Glory: Loneliest Time

Attending Shanghai International Film Festival, Nicole Kidman talks about her role in "Grace of Monaco".

Labor Day Travel Peak Starts
Also in the News2014/05/01 12:16August 21 2018 10:15:53

Labor Day Travel Peak Starts

Johnny Depp Delivers a Speech 'Evolve the Future' in 'Transcendence'
Also in the News2014/04/18 13:18August 21 2018 10:15:53

Johnny Depp Delivers a Speech 'Evolve the Future' in 'Transcendence'

Hollywood star Johnny Depp's speech in the upcoming new film "Transcendence" has been disclosed on Friday, April 11th.

News:
China World Business Sports Showbiz Audio
Video:
C4 My Chinese Life The Sound Stage China Revealed Showbiz Video Travel Video
Photos:
China World Fun Travel Entertainment Sports
Travel:
Beijing Shanghai Guangzhou
Lifestyle:
Live Music Opera & Classical Movies Traditional Shows Exhibitions
Learn Chinese:
Chinese Studio Living Chinese Everyday Chinese Just For Fun Chinese Culture Buzzwords