A three-shot cure for China’s zombie problem

The country should form new bad debt agencies, encourage foreign distressed debt specialists and create a proper bad debt resolution process, or risk a full-blown credit crisis.

China’s four so-called bad banks have made a lot of money from gorging on bad debts. But they risk having too much of a good thing. 

On March 7, Lai Xiaomin, chairman of China Huarong Asset Management, said in a proposal to the National People’s Congress that the country’s four bad banks, aka asset management companies, were struggling to cope with the latest surge in soured assets. 

Huarong is one of four bad banks set up in 1999 to take on the troubled assets of the country’s four largest lenders  Industrial Commercial Bank of China, China Construction Bank, Bank of China and...

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