Why China’s bad bank has some investors rattled

A state-backed bank in China, created to clean up bad loans in the wake of the Asian financial crisis, is in trouble. And it might not be bailed out. John Stepek explains what’s going on, and why it matters.

Lai Xiaomin, chairman of China Huarong Asset Management Co
Lai Xiaomin: death cast something of a shadow over the company
(Image credit: © Anthony Kwan/Bloomberg via Getty Images)

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Today we turn to China, and a big bad bank that has been rattling credit markets over there. China Huarong Asset Management is a financial company backed by the Chinese state. It was set up in the late 1990s as a “bad bank”.

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John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.