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This year is shaping up to be the biggest by far for defaults in China’s $13 trillion bond market, highlighting the widening fallout from the government’s campaign to rein in leverage.
Companies defaulted on 39.2 billion yuan ($5.8 billion) of domestic bonds in the first four months of the year, some 3.4 times the total for the same period of 2018, according to data compiled by Bloomberg. The pace is also more than triple that of 2016, when defaults were more concentrated in the first half of the year, unlike 2018. The trend is clear: unless something changes, 2019 will be the new high.
China continues to press banks to extend credit to the private sector, and small and medium-sized companies especially. The latest move came Monday, when the central bank loosened some reserve-requirement rules for lenders. But President Xi Jinping’s team has also focused on shrinking the shadow-banking system, where credit decisions were made with less regulatory oversight and where it was easier to build up unsustainable leverage.
Beijing often uses such measures to quell domestic political opposition in the party. Is there something bigger afoot?
(Score: 2) by Fluffeh on Thursday May 09 2019, @04:31AM (3 children)
The Belt and Road Initiative says hi [wikipedia.org] - except in that case, a huge majority of the loans are going to other countries - who also can't really pay the loads back - but you know, at least they can do a few favours and get some of the debt written off right?
There's few countries that play the long game better than the Chinese, you really have to give em that!
(Score: 0) by Anonymous Coward on Thursday May 09 2019, @07:28AM
well, there's few countries that started the long game at the same time that the Chinese did...
(Score: 0) by Anonymous Coward on Thursday May 09 2019, @08:59AM (1 child)
Because in other countries it's all about reactionary policies to keep the populists happy. In China, there is no such problems. Chinese leaders realize that keeping *order* is most important part of a society, not placating one group or another. They also realize that playing one group against another is the worse thing you can do for your own country - you know, they learn from history! In that way, they are quite opposite of Americans, who learn nothing and think "but it's us, we are special unlike the ..." (insert your favourite nations/empires - like Germany, Russia, France, British Empire, Japan, etc.)
(Score: 4, Funny) by PiMuNu on Thursday May 09 2019, @09:21AM
> they are quite opposite of Americans
[sarcasm]China, renowned for its historical lack of hubris.[/sarcasm]