The central business district in Beijing. The spate of defaults from bonds involving state-owned enterprises, once considered safe picks, has spooked investors. But it should also encourage companies to be more accountable for their balance sheets and cash flows. Photo: Reuters The central business district in Beijing. The spate of defaults from bonds involving state-owned enterprises, once considered safe picks, has spooked investors. But it should also encourage companies to be more accountable for their balance sheets and cash flows. Photo: Reuters
The central business district in Beijing. The spate of defaults from bonds involving state-owned enterprises, once considered safe picks, has spooked investors. But it should also encourage companies to be more accountable for their balance sheets and cash flows. Photo: Reuters
Kerry Craig
Opinion

Opinion

Macroscope by Kerry Craig

Bond defaults will force a needed repricing of risk in China’s credit market

  • The sheer volume of debt going bad, particularly involving state-owned enterprises, signals that the government is taking a more market-based approach
  • In the longer run, this will encourage greater fiscal discipline and force markets to reflect the true risks, improving transparency in the world’s second-largest bond market

The central business district in Beijing. The spate of defaults from bonds involving state-owned enterprises, once considered safe picks, has spooked investors. But it should also encourage companies to be more accountable for their balance sheets and cash flows. Photo: Reuters The central business district in Beijing. The spate of defaults from bonds involving state-owned enterprises, once considered safe picks, has spooked investors. But it should also encourage companies to be more accountable for their balance sheets and cash flows. Photo: Reuters
The central business district in Beijing. The spate of defaults from bonds involving state-owned enterprises, once considered safe picks, has spooked investors. But it should also encourage companies to be more accountable for their balance sheets and cash flows. Photo: Reuters
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Kerry Craig

Kerry Craig

Kerry Craig is a global market strategist at JP Morgan Asset Management.