China

Why the Evergrande-Shengjing Bank tie-up is a worrying sign

The marriage between a heavily-indebted real estate developer and a poor capitalised bank could be a bad example for other lenders to follow.

China Evergrande Group’s Rmb13.2 billion ($1.9 billion) investment in Shengjing Bank is touted as a key move for the property developer to tap into the financial sector. However, the seemingly straightforward transaction raises a host of potentially difficult questions for the Chinese economy.

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