Only in China: Companies Become Banks to Solve Financial Difficulties

Only in China: Companies Become Banks to Solve Financial Difficulties
People work at an offshore oil engineering platform in Qingdao, Shandong province, July 1, 2016. Because of too much debt, a Chinese engineering company has recently transformed itself into a bank. STR/AFP/Getty Images
Valentin Schmid
Updated:

China is desperate to solve several problems it has due to its debt to GDP ratio being north of 300 percent. It may have found a pretty unconventional one by letting companies become banks, according to a report by the Wall Street Journal.  

With profits headed south, heavily indebted Chinese heavy-machinery giant Sany Heavy Industries said this week it won approval to set up a bank in the Hunan Province city of Changsha. With 3 billion yuan ($450 million) of registered capital, it will be a relatively large institution as Chinese city-based banks go. Sany plans to join forces with a pharmaceutical company and an aluminum company.

Sany already operates an insurance and finance division with the goal of internal financing and insurance services for clients. 

Sany Heavy Industries already operates a Finance and Insurance arm, although it's unclear what gold has to do with it. (Company Website)
Sany Heavy Industries already operates a Finance and Insurance arm, although it's unclear what gold has to do with it. Company Website
Valentin Schmid
Valentin Schmid
Author
Valentin Schmid is a former business editor for the Epoch Times. His areas of expertise include global macroeconomic trends and financial markets, China, and Bitcoin. Before joining the paper in 2012, he worked as a portfolio manager for BNP Paribas in Amsterdam, London, Paris, and Hong Kong.
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