HONG KONG — For Chinese banks, the decision to lend to companies like Bohai Steel was for years a no-brainer. Lenders took heart from its state backing, which appeared as solid as the millions of tons of steel pipes that rolled off its production lines each year.

That ironclad image is now tarnished. Plunging demand and a worsening glut in production capacity have left Bohai Steel struggling to repay as much as $30 billion in debt. Worried creditors — more than 100 of them — are locked in negotiations with the company and local officials.

China’s bad loans are on the rise, as companies that borrowed heavily in headier times struggle against a slowing Chinese economy. Underscoring the slowdown, China said on Friday that growth in the first three months of this year fell to 6.7 percent, a seven-year low. Growth might have been even slower, had China not revved up lending during the quarter — a solution that could add to debt problems later on.

The stakes are high for banks and for the Communist Party, which ultimately controls wide swaths of China’s economy.