China may be forced to continue to increase its debt
position. Their cash flow future looks grim.
China’s debt is largely held by corporations. The problem is
a fair number of their small and large companies are poorly managed. Their
inefficient equipment and systems results in high-cost, money-losing operating
companies. This results in deficit cash flows which severely limits the capital
available for the repayment of debt.
China is reportedly attempting to have lenders restructure
weak loans into equity. The majority of the lenders are banks. Banks will be
converting their loans into equity in a number of financially distressed
companies which may negatively affect a bank’s financial condition.
Will the current tariff challenge affect corporate revenue
and further increase operating losses?
As a consequence China may need to increase its debt to
support companies incapable of repayment or restructuring.
Debt Articles:
Tariff Articles:
