Research On Debt And Risk Management Of State-Owned Enterprises In Coal Industry

State-owned enterprises have always occupied a strategic position in the long history of China’s economic development.Due to the fact that their registered capital is wholly-or partly-owned by the State,they not only get involved in the market competition,but also shoulder the social responsibilities,such as infrastructure construction and livelihood services in China.With the “state-owned background” and“different descent” from private enterprises,they are naturally more competitive in financing as their credibility are generally better,thereby having more advantages in financing cost and channels and amount financed,while,however,they are also under more stringent supervision and restrictions when working with the funds for the same reasons.In addition,the projects that state-owned enterprises construct and invest in require substantial funds,so that they are in urgent need for financing,which result in scaling-up debt,gearing ratio,and consequent risks.Therefore,a looming threat is evident for the healthy development of state-owned enterprises.Since 2012,China has entered a new normal economic development model that the developing speed of China’s economy has shifted from high to medium-high on a high-quality sustainable development trajectory.Therefore,the "quality and efficiency development" puts forward a higher demand on enterprises,so that the operating requirements and risks in all industries have been increased,as well as the corporate debts and leverage ratios.Coal is the pillar energy in China,so that the coal enterprises are generally state-owned.With the market demand for coal energy slowing down recently,its supply has exceeded the demand,which has tremendously impacted on China’s coal market.The “cold winter” has arrived for the coal industry,coupled with the implementation of the industry’s supply-side reform while the lagging transformation of some enterprises being accompanied by debt problems.Thus,all these “heavy debts” make enterprises struggling,thereby,posing a major threat to China’s energy supply,security and stability.With the implementation of the supply-side reform of the industry,the Energy Investment Group in City C,mainly focusing on coal,gas and other energy,has embarked on a new journey of business transformation for development.However,due to its lagging transformation,it did not achieve the expected benefits,so that the pervasive debt crisis eventually led to its bankruptcy and reorganization.This paper conducts in-depth research on its debt crisis with comprehensive methods such as literature research and case analysis,and implements systematic analysis from the aspects of debt identification,analysis and evaluation,and risk management.The countermeasures and suggestions are put forward for debt and risk management by improving the financial early warning system,optimizing the business development structure,and diversifying capital operations,so as to provide references for the debt and risk management of state-owned enterprises in the coal industry.This paper conducts research from the perspective of debt and risk management of state-owned coal enterprises,and break the traditional thinking pattern of state-owned enterprises replying on the government as a safe net.Based on the study of the debt crisis of Energy Investment Group in City C,it is found that the debt and risks commonly exist in state-owned enterprises in the coal industry,and proposed key measures such as improving the profitability of operating business and strengthening core competitiveness.Overall,the results of this paper are of great significance to the state-owned enterprises in the coal industry breaking through the debt crisis to transform smoothly.