If the coronavirus outbreak keeps Wang Zhi’s shoe factory closed for much longer, the Chinese entrepreneur reckons he will default on a Rmb5m ($718,000) loan coming due in June.
With no end in sight to the health emergency that has killed more than 1,100 people across China, it is small corporate defaults such as this that threaten to cause big trouble for the country’s banks.
A prolonged crisis in which factories and shops are unable to do business would add as much as Rmb5.6tn in new bad debt for lenders, trebling non-performing loans, according to S&P Global Ratings, as companies struggle with repayments.
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