Beijing set up four state-owned entities to help clean up a banking system weighed down with bad debt in the late 1990s. The largest of the four, China Huarong Asset Management, has long benefited from low yields and government support. Now the distressed debt manager has become the one to threaten the stability of China’s credit market.
Huarong’s Hong Kong-listed shares have been suspended since April 1 after it failed to report results for last year by a March 31 deadline. Confidence in the debt manager was further shaken by local traders, who circulated a report of the worst-case scenario — a possible bankruptcy.
It would have been easier to uncover the full extent of Huarong’s troubled finances if Lai Xiaomin was still around to question. But in January China executed the group’s former chair for bribery.