Debt-laden ‘zombie’ companies imperil China’s growth

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We feature these Chinese stories because China is the world’s second largest economy and has been the worlds chief engine of “growth” for nearly a decade now. If China catches pneumonia, well, you know the rest.

(From The Australian)

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 pockmarked 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.

Click here for the article.