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Vulture funds poised to swoop in on non-performing loans in China

Pragmatic government needs foreign money to tackle high level of distressed debt

The pragmatic Chinese government is tolerating foreign money to support the economy.   © Reuters

SHANGHAI -- The specter of non-performing loans is once again looming over China.

The volume of distressed debt, which was already rising due to the economic slowdown since last year, is likely to grow further with financial authorities requesting banks to more actively lend money to businesses hit by the novel coronavirus outbreak. And foreign distressed debt investors, often called vulture funds, see opportunity. The government tolerates foreign money as it supports the economy, putting China on the global front line for investing in bad loans.

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