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China: Corporate debt crisis spreads/Zhongwang: suspended in stock market & fraud conviction in U.S.

Posted in business, finance, law

This company’s entry in the US; market; along with other aluminum giants is said to have caused the shutdown of a large number of Aluminum manufacturers based in the US. It seemed that local US companies were unable to compete with state backed companies which were taking advantage of the free trade agreement.

However, the trade tariffs along with recent events have in turn caused this firm to become insolvent. It’s founder is now being detained by the US under fraud charges.

China Zhongwang Holdings Limited is known as the “King of Aluminum in Asia. On October 15th, China Zhongwang suddenly announced its subsidiaries “had suffered significant losses and operational difficulties. Despite efforts from various parties, they are unable to solve the current problems on their own.” The two subsidiaries mentioned are the primary companies of the corporate business.
The debt crisis of Chinese companies is spreading, which can bring about a serious financial crisis in China. For example, China’s big business conglomerate, Baoneng Group, has experienced increasing strain on its capital chain. Currently, it has defaulted on at least nine items of trusts, involving a total of about $3.1 billion US dollars. Moreover, it has seen a rising risk factor for its subsidiaries, with frequent news about equity pledges, property freezes, and legal proceedings.

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