China’s most coal-dependent province has moved to ease rising pressure on seven of its largest coal miners by extending the maturity on up to Rmb400bn ($60bn) in loans, in a sign of the severity of the bad-debt crisis gripping the country’s coal sector.
The move by Shanxi province marks the first time a local regulator has asked banks for leeway on loans for a select group of companies. It is the latest in a series of tactics employed by the country as it tries to pare bad debt, which by some analysts’ estimates has reached epidemic levels.
The central government last year launched a Rmb4tn-and-counting programme that pushed banks to swap debt from many local government businesses for longer-maturity bonds. This year, Beijing announced a controversial plan in which banks would trade corporate debt for equity in companies.