Debt-to-equity plan expected soon
China could allow industrial firms to convert their debt into equity stakes as early as next month, with the government now putting the finishing touches to a new plan, the official China Securities Journal reported onMonday. The newspaper said China’s cabinet, the State Council, was cur- rently finalizing plans to allow “firms in the real economy with development potential” to convert their debt into equity. Debt has emerged as one of China’s biggest challenges, with the total load rising to 250 percent of gross domestic product last year. The InternationalMonetary Fund warned in June that China’s high corporate debt ratio of 145 percent of GDP could erode economic growth if not addressed. rose to 1.1 billion yuan ($165 million) for the six months through June, from 965.3 million yuan a year earlier. That compared with the 1.12 billion yuan average of three analyst estimates compiled by Thomson Reuters.