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State-owned enterprises: non-performing loans

The problem became apparent when Yongcheng Coal & Electricity Holding Group, a mining operator under the Henan provincial government, defaulted on a loan of over €120 million in early November. A company, mind you, that had been given a top AAA rating by Chinese credit rating agencies. The latter is a much bigger problem than the loan amount itself: The Chinese rating agencies’ early warning system doesn’t work. And that’s risky. After all, Yongcheng Coal’s parent company, Henan Energy and Chemical Industry, is one of the largest state-owned enterprises in the province.

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