Shandong Chenming Paper Secures Loan Guarantees to Stabilize Production Amid Industry Challenges

Chinese paper producer Shandong Chenming Paper has backed over 2.5 billion yuan in loan guarantees to improve cash flow and restart production at its main factory. The syndicated loan, led by Weifang Xingchen and supported by local governments, taps into collateral including land, property, and mortgage guarantees. Although this financing aims to steady operations, the company’s stock fell nearly 4% as investors remain cautious about the industry’s mounting debt and weak demand. The paper sector in China is grappling with liquidity issues, and while loans provide temporary relief, market doubts persist about these measures addressing underlying structural challenges. Local authorities are increasingly stepping in to support manufacturers, reflecting broader strains in China’s industrial economy where growth is shifting from demand-driven to cash-flow-driven dynamics. Without improved sales or cost controls, the sector’s long-term recovery remains uncertain despite these financial lifelines.