The county at the centre of a Chinese debt crisis
Aluminium producer in Zouping, Shandong province, borrowed billions as it expanded into property development, power cables, ceramics and even a five-star hotel
The dusty streets of Shandong’s Zouping county present a picture of a roaring Chinese economy, with yellow-helmeted construction workers moving in groups, tankers with liquefied aluminium shuttling between factory gates and coal trucks forming long queues on roadsides.
Zouping, population 800,000, is one of China’s richest counties. It’s home to the country’s biggest privately-owned aluminium smelter, a big corn oil and steel conglomerate, and hundreds of other industrial enterprises.
But the picture of prosperity is starting to fade at the heart of the polluted county town, the location of the office tower of Qixing Group, whose name literally means Star of Shandong.
The building became the epicentre of a regional debt crisis in recent weeks. The crisis, brought under control after the local authorities stepped in, wiped billions of yuan from the valuations of the nine listed companies based in Zouping and raised fresh doubts about the true dangers of the mountains of debt underpinning China’s economy.
“Corporate sector debt has now risen to quite a high level because of China’s investment-driven growth model,” said Shen Jianguang, chief economist at Mizuho Securities Asia in Hong Kong.
State-owned enterprises and large private businesses that could affect local economies and employment were particularly indebted, Shen said, and Beijing’s attempts to cut corporate debt levels had fallen short of the mark.