Incoming data continue to point to strength in domestic activity, spending and revenues. Yet strains in China’s corporate bond market continue to grow, with the value of defaults hitting all-time highs. This underlines the degree to which credit risk in China hinges on shifts in the policy stance rather than fundamentals. Defaults, particularly by state-owned firms, happen when policymakers allow them to, and there have been more defaults by state firms over the past six months than by private firms. That’s never happened before. This campaign to instil more discipline in credit markets will continue as long as policymakers remain confident about the economic backdrop.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services