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Chinese default sends government signal about market discipline


economy

Chinese default sends government signal about market discipline

For the first time a Chinese company has defaulted on its debts to bondholders – in China.

Loss-making solar panel producer Chaori Solar missed an interest payment to investors saying it had less than five percent of the money it owed.

Other Chinese companies have recently come close to defaulting, but were bailed out at the last minute, with local or national government cash.

The fact that this did not happen for Chaori is seen as a sign that Beijing is serious about letting market forces take their course, so that weak borrowers go broke and investors realise there is not an automatic state safety net.

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