Mandarin/Nat At least six state companies in southern China have missed repayment of domestic bonds, adding to a string of defaults that have burned banks and investors in the financially troubled Guangdong Province. The Guangdong Province has been the biggest engine driving China's development throughout the country's 20 years of economic reform. But after its biggest trust company G-I-T-I-C went bankrupt last month, Guangdong's fortunes have suffered and companies in the province appear to be teetering on the brink of insolvency in what some analysts fear may be a downward spiral. China's southern prosperous Guangdong Province is closer to the former British colony of Hong Kong in both location and spirit. The southerners here like to say, \"The mountains are high and the emperor is far away\" - in other words they've been able to make their fortunes without overbearing control from the Chinese administration. This is precisely what is now worrying both China's leadership and many foreign banks. Just weeks ago the trust company known as the \"pride of Guangdong\" was forced into bankruptcy - the largest bankruptcy in Chinese history. It is now feared that the failure of G-I-T-I-C, or Guangdong International Trust and Investment Corporation, may be just the beginning of a disastrous series of defaults and bankruptcies. The current crisis arose when China's central government refused to pay G-I-T-I-C's debts, triggering the bankruptcy. Without guarantees from the central government, foreign bankers have now lost confidence in their loans to many Chinese companies and financial institutions. Guangzhou city's own trust company, G-Z-I-T-I-C, is now also reported to be in serious trouble. Last week Guangzhou officials said they are trying to save the city's investment firm from drowning under 400 (m) million U-S dollars of foreign debt. G-Z-I-T-I-C is having trouble raising cash, and city officials said they may let the trust go bankrupt if it can't meet its obligations. Another major investment arm of the province, Guangdong Enterprises, is currently pleading its case for debt restructuring with its bankers. On Friday the Hong Kong Monetary Authority urged the company's creditors to be patient. While most of Guangdong Enterprises' assets are on mainland China, the company is registered in Hong Kong. This has raised fears that the company's failure could trigger a rush to call loans at other Chinese-backed firms in the former British colony - an event that some economists say could send Hong Kong's economy plunging into a black hole. And there has been more bad news for Guangdong as at least another six state-owned firms failed to repay debt totalling about 500 (m) million yuan or 60.4 (m) million U-S dollars. Maoming Acrylic Fibre Co is said to have one of the biggest debts of 100 (m) million yuan. Investment company employees in Guangdong have been reluctant to speak to reporters since G-I-T-I-C collapsed. But a worker at Guangdong Enterprises said there is no talk of bankruptcy at his company at the moment. UPSOUND: (Mandarin) \"We don't have that problem. We are just having a capital reorganisation, not bankruptcy.\" SUPER CAPTION: Guangdong Enterprises Employee Analysts say that a domino-like series of failures at Guangdong's trust companies could imperil its so-called commercial banks as well. Against this backdrop, Guangdong's leadership opened its People's Congress session last week. Accentuating the positive, Guangdong's governor said he will work hard to put their financial house in order. SOUNDBITE: (Mandarin) SUPER CAPTION: Lu Rui Hua, Governor, Guangdong Province SOUNDBITE: (Mandarin) SOUNDBITE: (Mandarin) You can license this story through AP Archive: http://www.aparchive.com/metadata/youtube/143693dc6a2a09e666ae107c38a32ae6 Find out more about AP Archive: http://www.aparchive.com/HowWeWork

• published: 21 Jul 2015
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