BEIJING: China will show “zero tolerance” for misconduct following a series of recent bond defaults, said a meeting of the Financial Stability and Development Committee chaired by Deputy Prime Minister Liu He.
Fraudulent issuance, disclosure of false information, malicious transfer of assets and misappropriation of issuance funds will be strictly investigated, the meeting said, according to an account on a government website.
Several high-profile defaults by Chinese state-owned companies, including Yongcheng Coal & Electricity Holding Group and Huachen Auto Group Holdings Co, have recently caused shock waves in the Chinese corporate bond market.
Chinese regulators have investigated the two state borrowers and their bond insurers.
The bond’s bankruptcy has eroded investor confidence and pushed up funding costs for many corporate borrowers, adding pressure to the burgeoning economic recovery in China.
Several “debt evasion” behaviors will be severely punished, the meeting said. The bond defaults were the result of cyclical, institutional and behavioral factors, it added.
Prevention and warning systems will be strengthened to avoid systemic risk, and liquidity should be kept reasonably generous, the meeting said. – Reuters