Tranlin Inc., a Chinese paper manufacturing company that promised to invest $2 billion and hire 2000 employees in Chesterfield County, has failed to meet a deadline for repaying a $5 million incentive grant from the state. The company informed the Virginia Economic Development Partnership (VEDP) that the company could not fully repay the loan, instead writing a $150,000 check and vowed to repay the balance in monthly installments, reports the Richmond Times-Dispatch.

“We are deeply sorry and apologize for the delay in full repayment,” Tranlin’s acting CEO Donald Lan said in a letter to VEDP President Stephen Moret. The company agreed to give the state a first-position lien on 50 acres in Chesterfield it has purchased for $3.2 million, which Lan described as “a sign of good faith to meet the repayment obligation.”

Tranlin insists that it still intends to proceed with the Chesterfield project, which was originally scheduled to begin operation by late 2019. Earlier this year, the company informed Virginia officials that its timetable had encountered delays when the company changed leadership and decided to install a new technology that required a redesign of the Chesterfield project.

The Tranlin news follows revelations in 2016 that a different Chinese company, Lindenburg Industry, reneged on a $1.4 million grant from the state to build a factory in Appomattox County. Lindenburg, it transpired, was a hoax company. By contrast, Tranlin is real. State officials have visited its plant in China. Doing business  under the name of Vastly, the company describes itself this way: “We make tree-free paper products and plant-derived fertilizers from post-harvest straw, using an earth-restorative process.

Bacon’s bottom line: I have nothing factual to add to this story, only questions and suspicions. Many Chinese companies are highly leveraged, and the Chinese economy is notorious for tolerating — and hiding — high levels of bad debt. The company is huge, otherwise it couldn’t contemplate building a $2 billion factory in the U.S. A financially sound company of that magnitude should have no trouble repaying a $5 million loan. The fact that Tranlin can’t fulfill that obligation ought to send up warning flares about its financial condition.

Back in July, the Wall Street Journal published an article describing how President Xi Jinping, the most powerful Chinese leader since Mao Tse Tung, is clamping down on the overseas expansion of Chinese companies by restricting their access to credit from state-owned banks. Wrote the Journal:

Beijing for years encouraged Chinese companies to scour the globe for deals. Now it is reining in some of its highest-profile private entrepreneurs in what officials say is growing unease with their high leverage and growing influence. The measures serve as a stern warning for other big companies that loaded up on debt to buy overseas assets, officials and analysts say.

Mr. Xi acted after China’s cabinet set the government machinery in gear by directing financial regulators, the economic planning agency and other bureaucracies to take a hard look at foreign acquisitions, once seen as a means for China to showcase its economic might, these people said.

Another reason for suspicion is the unexplained departure in March of CEO Jerry Peng, who sealed the economic development deal with Governor Terry McAuliffe. The company gave no reason for the departure of Peng, a graduate of the University of Virginia’s Darden School of Business, and a company spokesman had no comment beyond the company’s short statement. Very little can be found in U.S. media (via Google searches) about the inner workings of the Chinese company, so Peng’s departure remains a mystery. However, I would argue that his removal and Tranlin’s delays should be viewed in the broader context of Xi’s consolidation of power, his campaign against excessive leverage, and his reining in of private industry.

Will Tranlin ever build that Chesterfield plant? Let’s just say that, if I were a betting man, which I’m not, I wouldn’t bet on it.