According to an article in Securities Times, companies are facing possible noncollectable accounts as their customers are not making their payments on time or are not paying at all. As of March 2012, industrial enterprises’ accounts receivable had increased by 17.74% compared to the same period last year. As of August 23, 2012, the total accounts receivable of the 1,437 listed companies that had already published their interim reports had risen drastically – by 45% – compared to the previous year.
According to Li Yang, Vice-President of the Chinese Academy of Social Sciences, a top government think tank, China’s corporate debt-to-GDP ratio stood at 107 percent in 2011, the highest in the world. A ratio that exceeds 90 per cent is considered “dangerous.” Li cited the standard set by the Organization for Economic Cooperation and Development.
Source: Securities Times, August 28, 2012