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Record Defaults Hit Weak Chinese Firms as Liquidity Tightens

  • Commodity and property firms, LGFVs face growing pressure
  • Defaults in China seen rising further; systemic worry muted
Updated on

It’s becoming clearer which parts of China’s corporate sector are most at risk of credit-market stress as Beijing pulls back liquidity: property firms, local government financing vehicles and energy producers.

Developers account for a fifth of the $10 billion worth of delinquencies in China this year, while some concern is growing over local state-linked firms after one based in Chongqing missed payments on commercial bills. Coal companies in the country’s northeast are struggling to refinance in the wake of a shock default by a state-owned firm late last year.