China’s maturing corporate bond market

Chinese companies are defaulting on their debt in record numbers. And the trouble could spread to state-owned enterprises.

Chinese soldier in front of Tiananmen Gate © Kevin Frayer/Getty Images

Beijing cannot afford to bail out everyone
(Image credit: Chinese soldier in front of Tiananmen Gate © Kevin Frayer/Getty Images)

"Chinese companies are defaulting on bonds in record numbers," writes Nathaniel Taplin in The Wall Street Journal. Private-sector businesses have been hit by both the trade war and a government crackdown on shadow banking. The result is that their default rate was 4% during the first 11 months of this year, compared with less than 1% two years ago. The fallout has so far been limited. But if the trouble spills over into the market for debt issued by state-owned enterprises (SOEs), which account for 90% of the bond market, we could be in for much bigger ructions.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
Markets editor

Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019. 

Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere. 

He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful. 

Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.