ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon Print

The troubling truth behind China's banking 'recovery'

Falling bad-debt buffers and risky bets add a deceptive shine to earnings

 (placeholder image)
Hong Kong's securities watchdog on May 8 took the rare step of extending the trading suspension for China Huishan Dairy shares following an exodus of directors from the company.   © Reuters

HONG KONG -- These days in China, when banks are in no mood to dole out cash, the country's old-economy enterprises start falling like a house of cards.

Soon after China Huishan Dairy Holdings, late on bank payments, saw its Hong Kong-listed shares plunge 85% on March 24, a group of companies led by aluminium maker Qixing Group failed to make good on loans worth at least 7 billion yuan ($1.01 billion). The incidents resurrected memories of the downfall of state-backed Dongbei Special Steel Group, whose chairman apparently committed suicide in March last year, days before the first of the company's nine defaults.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more