China's consumer debt cleanup falters as government crackdown on collectors slows loan recovery

China's efforts to clean up bad consumer debt are faltering as a government crackdown on debt collection companies slows loan recovery and deters investors. As many as 100 million people owe 2.2 trillion yuan (US$327 billion) in overdue debt. Banks have been selling these loans at steep discounts, but the crackdown has led to layoffs and closures among collection firms, reducing recovery rates. This could leave banks with more bad debt and hinder financial stability.