Beijing has stepped up its battle against bad debt in China’s banking system, with a state-led debt-for-equity scheme surging in value by about $100bn in the past two months alone, reports the Financial Times. The government-led program, which forces banks to write off bad debt in exchange for equity in ailing companies, soared in value to hit more than $220bn by the end of April, up from about $120bn at the start of March, according to data from Wind Information. Industry watchers have fiercely debated how far Beijing will go to recapitalize the financial system, with bad loans taking up an ever higher percentage of banks’ balance sheets — as much as 19 per cent by some estimates.

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