In a test of Chinese authorities’ commitment to reducing financial risk, a large Chinese manufacturing group has begged for a government bailout to avoid default on up to $7bn in debt after a regional lender withdrew loans.
Over the past year, China has tightened credit in a bid to tackle an explosion of corporate debt that the International Monetary Fund has called “ dangerous ”. But the plea highlights how painful Beijing’s deleveraging campaign has been for some indebted groups.
The letter from privately owned DunAn Group, seen by the Financial Times, appeals directly to government concerns about financial stability in asking for officials to intervene with banks to resolve a liquidity crisis. DunAn has Rmb45bn ($7bn) in outstanding debt, according to the letter.