Cash Crunch Worsens as Liquidity Plentiful, Capital Not

Liquidity is everywhere, but Chinese businesses don't have a drop to drink.
CNBC: Corporate China grubbing for cash as liquidity tightens
Chinese companies, with ever more cash tied up in stocks and unpaid bills, are facing their tightest liquidity crunch in a decade, according to a Reuters analysis, forcing some into more costly and less secure borrowing to stay afloat.

The analysis of Chinese listed companies that have reported 2015 earnings shows it takes them almost 170 days to turn working capital - broadly the net amount tied up in stocks and bills payable and receivable - into cash.

For the 141 of the companies that have been around for at least a decade, the figure is 130 days, compared with roughly one month 10 years ago, and both the amount clients owe them and the amount they owe suppliers are at the highest level since at least 2006.
In other words, it is a slowdown that has yet to end.
Businesses are also increasingly resorting to selling their unpaid bills to a third party, suffering a discount on the face value of the debt but getting immediate access to cash.

Discounted bills now amount to 46 percent of the total, up from 20 percent at the end of 2013, according to research firm CreditSights - its highest level since monthly data began in 2011.
In other words, deflation.

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