Vampire attack: Debt-laden companies imperil China’s growth

Debt is credit; credit is debt; all back to front and upside down; in peace

Follow The Money


China isn’t just contending with falling stocks, a plunging currency and a slowing economy.

It’s got vampire trouble, too.

The Chinese economy is pock-marked with companies that can’t pay their bills and survive only with government help. Jiangshi, the Chinese call them — “vampire companies.” Or zombies.

These ghoulish companies and their debts are hindering the world’s second-biggest economy and will likely do so for years. Companies that miss debt payments inflict losses on banks, which then find it hard to lend even to solid companies. By propping up vampire companies, the government can weaken the entire economic ecosystem.

All of which helps explain why the global economy is sputtering and why investors have been gripped by panic.

“It’s undoubtedly a very serious problem,” says Charles Collyns, chief economist at the Institute of International Finance. “The Chinese so far have been very reluctant to let market mechanisms work their…

View original post 279 more words

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s