Bond defaults have soared in China
Nov 28th 2019SHANGHAION NOVEMBER 25TH China National Radio launched a mini-series to laud President Xi Jinping’s stewardship of the economy. For a state broadcaster, that might sound perfectly normal. But the theme of its first report was neither China’s stellar growth nor its sparkling innovations. Rather than such standard fare for propagandists, it focused on creditor committees, which aim to restructure companies that have run into financial difficulties. It was the latest sign of China’s rapid shift from denying that it had a debt problem just a few years ago to grappling with it publicly.The bond market bears out the change. It was only in 2014 that China experienced its first default on a domestically traded bond. In 2018 defaults hit 117bn yuan ($16.5bn), triple the previous high. This year defaults are on track to reach roughly the same value. About 1% of all issuers defaulted in the first three quarters of this year, just a little below the global level, according to Fitch, a ratings agency. Bond defaults, says S&P Global, another ratings company, are “becoming a norm”.Choose us for news analysis that respects your time and intelligenceSubscribe to The EconomistWe filter out the noise of the daily news cycle and analyse the trends that matterWe give you rigorous, deeply researched and fact-checked journalism. That’s why Americans named us their most trusted news source in 2017Available wherever you are—in print, digital and, uniquely, in audio, fully narrated by professional broadcastersThis website adheres to all nine of NewsGuard‘s standards of credibility and transparency.ORContinue reading this articleRegister with an email address