Solution to China Debt Problem: Swapping Debt for Equity

The NYT left this off the list of possible solutions in an artice on China's rapidly growing private sector debt. The basic story is a simple one. Creditors are given an equity stake in a company in exchange for reducing or eliminating the company's debt liability. In a rapidly growing economy like China's, there is no obvious reason this can not be done on a large-scale, thereby radically reducing debt liabilities.