BEIJING: China will continuously urge state-owned enterprises (SOEs) to strengthen the prevention and control of debt risks, according to China’s state asset regulator on Tuesday. “A number of local SOEs defaulted recently, which is caused by the pandemic attack, market fluctuations, and other external reasons as well as internal factors such as blind expansion and poor management,” said Peng Huagang, spokesperson of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) at the press conference.
While the debt risk of central SOEs is generally under control, he noted.
SASAC will formulate the guideline to urge local regulators to accurately identify companies with high risks, properly handle risks in accordance with market-oriented, legalized and internationalized principles, effectively maintaining local financial ecology and stability, Peng said. Some Chinese enterprises reported corporate bond defaults last year due to a COVID-induced slump in revenue and alterations in the domestic and external economic environment. For example, the AAA-grade bond defaults of China’s state-owned Yongmei Group and Brilliance Auto Group have caught public attention and dampened market confidence. The Huachen Automotive Group Holdings has entered bankruptcy restructuring in November after struggling with debts and loss-making of its self-owned brands and defaulting on a 1-billion-yuan bond. The state-owned conglomerate is the parent of Brilliance China Automotive Holdings, which teamed up with German carmaker BMW to form a joint venture BMW Brilliance Automotive in 2003.
–The Daily Mail-CGTN News exchange item
