Hard-up firms in China use cashmere and pork to repay loans


LI XINTONG DID not want one overpriced cashmere sweater, let alone a hundred. But when his loan to Jicai came due, the investment firm offered to repay him not in cash, but in sweaters. The value of 100 cashmere pullovers, it said, equalled his 150,000 yuan ($ 22,000) loan, and was thus fair compensation. Mr Li (not his real name) disagrees.

Perhaps he should count himself lucky. At least he did not receive dozens of packages of premium ham, as a troubled Chinese pig farm’s bondholders recently did, in lieu of interest. In another case, a financial subsidiary of HNA, a conglomerate that includes an airline, offered flight vouchers instead of cash when its clients’ investments matured.

The spate of unorthodox repayments highlights a squeeze in China’s financial system, which has hurt smaller companies and non-bank lenders most. So far this year companies have defaulted on 135bn yuan ($ 20bn) of bonds, more…

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