Photographer: Qilai Shen/Bloomberg

China's Plan to Clear Bad Loans Could Backfire, IMF Staff Warn

  • Converting debt to equity may keep alive `zombie' firms
  • Plan may create conflict of interests for bankers, report says

China’s plan to rid banks of bad loans could backfire, allowing debt-laden “zombie” companies to stay afloat and creating conflicts of interest for bankers, International Monetary Fund staffers warned.

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