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China People's Congress

Default risks rising for Chinese SOEs as state support weakens

Government-backed entity missed bond payments amid cash drain

China's state-owned companies may not enjoy the same level of support they once did. (Photo by Kosaku Mimiura)

BEIJING -- Investors can no longer count on China's local governments to bail out state-owned companies that have trouble paying their debts, as a nationwide deleveraging campaign and tax reforms start to bear fruit.

Alarm bells rang late last month when Qinghai Provincial Investment Group, an aluminum company owned by the Qinghai government, missed a coupon payment on a $300 million bond.

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