There are regulations on the disposal of non-performing assets of state-owned enterprises:

State-owned enterprises are seriously in debt, of course, first of all because of institutional problems. Under the trinity state-owned economic system of state-owned enterprises, state-owned banks, and government intervention, the "bad debts" owed by the state-owned economy as a whole to society will always occur in various forms (financial subsidies, triangular debt, wage arrears, junk stocks, Junk bonds, inflation, etc., we will not analyze them in detail here). However, one of the specific reasons for the occurrence of bad bank debt in this special form is that since the 1980s, the Chinese government has gradually transferred the financial responsibility of state finance for state-owned enterprises to banks. This is reflected in the following aspects:

1. Starting from the "appropriation to loans", the government has almost no longer invested capital in state-owned enterprises. The establishment and development of enterprises mainly rely on bank loans (of course there must be Government approval), whether it is fixed capital or circulating capital. Many of the so-called "state-owned enterprises" actually have no financial input from the state from the beginning.

2. When an enterprise suffers a loss, the government almost no longer provides financial subsidies to the enterprise. Instead, state-owned banks extend its debt or add new debt. The reasons for losses can be various, including poor management, social burdens (such as the state taking away various labor insurance funds that should have been left, etc.), or mistakes in decision-making by superiors (some companies simply should not be built), but as long as losses occur, the previous method of fiscal subsidies has been changed to the method of additional bank loans. This is a basic direct reason for the increase in bank bad debts.

This means that bank bad debt actually acts as a "fiscal subsidy". The establishment of state-owned enterprises without state finance to inject capital and subsidies will inevitably result in a large number of non-performing assets in state-owned banks. This is the internal logic of the "trinity of state-owned economy". When thinking about the relationship between state-owned enterprise liabilities and financial risks, we should link the issue of fiscal liabilities for a comprehensive inspection, regard the bad debts of state-owned enterprises to banks as "quasi-government debt", and treat the bad debts of state-owned enterprises and government liabilities together. Counted as "national debt". This analysis can first explain two aspects of the problem. On the one hand, it is why China has such a large state-owned economy but its government debt is extremely low (the balance of government debt accounts for only about 8% of GDP); On the other hand, Bank of China has a particularly high proportion of bad debt.