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Shuli Ren

Why China Is Bailing Out Huarong But Punishing Others

Is Xi Jinping favoring state-owned enterprises over other prominent companies with just as much debt? Or is something very American going on? 

An execution helped turn a bad bank into a morality tale.

An execution helped turn a bad bank into a morality tale.

Photographer: Chen xiaogen/Imaginechina

There’s a bit of unfairness going on amid Beijing’s regulatory crackdown on a vast array of companies. While it feels China does not care how much money foreigners have lost betting on its tech stocks and real estate developer bonds, one niche group seems to have escaped relatively unharmed: Investors in state-owned China Huarong Asset Management Co., one of the nation’s biggest dollar bond issuers. 

Huarong seems to have survived the nightmares that started in April when it failed to deliver its 2020 financials on time. A group of state-owned investors, including Citic Group Corp. and China Insurance Investment Co., will replenish the “bad bank’s” capital, the company said, without offering further details. Because of that, the distressed asset manager said it had no plans to restructure its debt, despite a record 102.9 billion yuan ($15.8 billion) loss last year. Huarong’s bonds have staged strong rallies lately.