Speed at which tech company raises billions sparks concern over China's corporate debt

New York

WHEN a Chinese tech company with global ambitions began to run short of cash last year, it sought billions of dollars from new investors. One of them was a music teacher. Li Shenghong, who teaches out of a mall storefront in southern China, was already a fan of the smartphones and televisions sold by the company, an Internet-and-gadgets conglomerate called LeEco. When LeEco also began selling investment products online, Mr Li snapped them up, even though the company said little about where the money would go.

LeEco, buffeted by rapid expansion, has turned to murky and potentially risky ways to stay afloat, including tapping China's shadowy informal banking system, which many believe threatens China's economy. The company courted small investors by promising good rates of return and playing down risks. All the while, its finances were deteriorating.