The plight of several private sector companies in Dongying has highlighted the dangers of cross-guaranteeing debt. Photo: Reuters

China’s debt iceberg: private firms going bankrupt after guaranteeing others’ loans

  • Banks reluctant to lend to non-state sector without a guarantor, so cross-guaranteeing is common and one bad loan can trigger multiple defaults
  • The private sector accounted for 126 of 165 bond defaults in 2018
Topic |   China economy

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The plight of several private sector companies in Dongying has highlighted the dangers of cross-guaranteeing debt. Photo: Reuters
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