Why is the Chinese government setting up national and regional asset management companies if the country’s nonperforming loans are under control?

Chinese government officials at the People’s Bank of China and state council appear to be finally acknowledging that defaults on bank loans, trusts, wealth management products and bonds are steadily increasing. In just the three months ending 31 March, NPLs increased by 54 billion yuan (US$8.7 billion) — the biggest increase since 2005 based on official government statistics.

The Big Four state-owned asset management companies (so-called national AMCs) are in the process of going public and raising a lot of money to purchase distressed assets. To date:

•   China Cinda Asset Management Co(China Construction Bank’s AMC) went public in Octob