Screw tightens on China Inc after Anbang's mess
Beijing has been slamming the brakes on companies that run up huge debts to fund pricey overseas acquisitions
Shanghai
BEIJING'S unprecedented takeover of private insurer Anbang confirms that toxic risks lurk in the world's second-largest economy while signalling the state's tightening grip on China Inc despite reform rhetoric, analysts said.
Government regulators seized control of Anbang Insurance Group on Friday, saying its debt-fuelled foreign acquisition binge left the company in financial peril and that high-flying founder and former chairman Wu Xiaohui would be prosecuted for fraud. The takeover, to last at least a year, was the most striking step yet by regulators to rein in dizzying debt levels and a clear sign that the government saw something frightening in Anbang's books.
"This move has huge significance. If something went wrong with Anbang, it would lead to massive bad loans in the financial system," said Beijing-based economist Hu Xingdou. China has moved aggressively over the past year to slam the brakes on companies such as Anbang, which ran up gargantuan debts to fund pricey ove…
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