International media outlets revealed that the Chinese authorities intend to penalize investors who discard the dangers of accumulating debts of the leading companies in the country.
The Economist”, a specialized economic newspaper, reported on Thursday, that the Chinese authorities provided loans to the Chinese asset management company, China Huarong Asset Management, the largest Chinese company, with the aim of working to save it and improve its performance.
The newspaper pointed out that the Chinese authorities’ provision of loans to the giant company showed the Chinese government’s intention to punish any financial institutions that ignored the risks of accumulating debts of major companies, and continued to provide loans to them, noting that the government left the giant company 5 months before it announced the provision of rescue loans to the company.
The process of providing loans to the Chinese giant company led to an improvement in the performance of the company’s bonds, despite the company’s bondholders incurring heavy losses during the past five months, which is the period before the announcement of the Chinese government intervention through its financial institutions.
The newspaper pointed out that the process of delaying the Chinese government's intervention to save the company in order to warn investors and any other financial institutions of the consequences of ignoring the risks of accumulating corporate debt.
Meanwhile, World Bank President David Malpass said that the bank is providing technical assistance to China to support it in fighting the coronavirus epidemic, but there will be no new loans.
In an interview with Reuters, a news agency, Malpass said that the bank is working with the World Health Organization (WHO) to help China, fight the deadly virus.
This assistance included providing advice on past health crises, but it does not intend to provide financial aid because China has abundant resources.
"China has its own large international reserves," Malpass added.
He affirmed that no new loans are being studied at the moment to China.
Beijing announced that it had foreign exchange reserves of$ 3.115 trillion dollars until last January.
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