金杜律所-中国不良贷款和资产支持证券市场：外国投资者和金融家指南I（英文版）

KWM ConnectChina’s NPL and ABS Markets: A Guide to Foreign Investors and Financiers – Part IApril 2019Written by Richard Mazzochi, Xiaolian Zhang, Anne-Marie Neagle, Stanley Zhou, Andrew Fei and Stella Wang1King & Wood Mallesons / KWM ConnectINTRODUCTIONNPLsAs China’s economy enters the “new normal” and undergoes significant transformations and reforms, Chinese companies – both private enterprises and state-owned enterprises – are experiencing rising debt levels. As a result, both official statistics and unofficial estimates indicate that the amount of non-performing loans (NPLs) held by Chinese financial institutions are on the rise.As part of its efforts to address the NPL issue and maintain financial and economic stability in China, the Chinese government is encouraging foreign investors to participate in China’s growing NPL market through a number of channels. This presents business opportunities for foreign investors and their financiers.This article provides foreign investors and financiers with a guide to China’s NPL market, focusing on the legal and regulatory landscape and some of the cross-border issues that they should consider. ABSChina’s asset-backed securities (ABS) market has grown exponentially over the past few years to become one of the largest and most active ABS markets in the world. China continues to open up its financial markets, including the ABS market, to foreign investors. In Part II of this series, we will explore the regulatory landscape for ABS in China, recent developments and the latest trends in ABS product offerings. Against this backdrop, we will summarize the channels for foreign investors to access China’s growing ABS market, including the growing number of onshore NPL securitizations. We will also look into how the Chinese legal framework addresses some common legal issues relating to ABS issuances. BACKGROUND TO CHINA’S LOAN MARKETSFirst, a quick word about China’s performing loan market.The loan markets in China continued to be active in 2018. According to financial statistics released by the People’s Bank of China (PBOC) during 2018, bank loans jumped 13.5% year-on-year to RMB 16.17 trillion (USD 2.49 trillion), an increase of RMB 2.64 trillion (USD 393.32 billion) compared to the figure for 2017.China has set two major tasks in the financial sector, which are serving the real economy, and preventing and resolving financial risks.In 2017, as ways of serving the real economy, PBOC continues to guide financial institutions to increase their support for private, small and micro enterprises, actively promote bond and equity financing by private enterprises and encourage local governments to set up private enterprise financing funds, and increase support for high-tech enterprises, emerging sectors and the structural transformation and upgrading of the manufacturing sector.China’s financial sector regulators have also continued their focus on preventing and resolving financial risks. Among others, the C