Chinese drawn up new plans to cut debt for 30 state firms

Vastavam web: More than 30 highly-leveraged Chinese state-owned enterprises (SOEs) have drawn up new plans to cut debt, the official China Securities Journal reported on Wednesday, part of a plan to cut debt ratios in the state sector by 2 percentage points by 2020. China is in the middle of an ambitious corporate restructuring program aimed at reducing debts and improving the performance of its huge but lumbering state-owned sector.

The 96 giant firms now administered by the central government are under pressure to cut their total debt ratios by 2 percentage points by the end of the decade. According to the latest Ministry of Finance data, total debts among China’s state-owned firms amounted to 112.2 trillion yuan ($16.36 trillion) by the end of July, up 8.8 percent on the year. The total debt amounted to 64.9 percent of assets, down 1 percentage point compared to last year. New guidelines published by the cabinet last week said China would establish a system enabling financial institutions to take action against state-owned enterprises when their debt-asset ratios exceeded warning lines, which range from 60 to 70 percent depending on the sector.