China Looks to Foreign Investors and Pensioners as Distressed-Debt Saviors

‘Bad banks’ look for fresh capital to tackle emerging financial risks

A worker pushes cart at the construction site of a housing complex under construction in Beijing on Aug. 15, 2017. Greg Baker/AFP/Getty Images

By some measures, China is making progress in its effort to deleverage and clean up bank balance sheets.

According to data from Bloomberg, China’s total balance of non-performing loans (NPLs) reached 1.96 trillion yuan ($285 billion) at the end of June 2018. To help lower this figure, China has been pawning off toxic loans onto foreign investors and unsuspecting pensioners.