The billionaire founder of China Pacific Construction Group said four of six local governments the company sued for late payment on infrastructure contracts agreed to pay the money they owe.
The closely held company will still pursue lawsuits against two local governments in Hunan and Shandong provinces, which owe more than 200 million yuan ($32 million) of the 900 million yuan the company originally sued for, Yan Jiehe said at briefing in Shanghai.
“We’ll carry these cases to the Supreme Court if needed,” Yan said. “The impact of filing the lawsuits came instantly and our account receivables have been dropping every single day.”
The lawsuits highlight the woes faced by China’s debt-ridden local governments, which may have accumulated as much as 25 trillion yuan in liabilities. Debt levels at some cities in the northeast province of Liaoning exceed the “warning line,” Xia Deren, the chairman of the province’s Chinese People’s Political Consultative Conference, said at a forum in Beijing today. The entire province has debt of more than 1 trillion yuan, he said.
In March, China stepped in with a debt-swap plan so governments could exchange high-interest borrowing for lower-cost municipal bonds. The scope so far is relatively small at 1 trillion yuan.
Yan said in an interview in January that he was trying to prove a point with the lawsuits and winning wasn’t his main goal. He said today the total owed amount to China Pacific Construction by more than 100 local governments fell by 10 billion yuan to 40 billion yuan after the lawsuits were filed in January.
China Pacific bills itself as China’s largest closely held construction company. Yan and his son, Yan Hao, ranked seventh on the Hurun Report’s 2015 China Rich List with wealth estimated at $13.7 billion.
— With assistance by Emma Dong