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China debt crunch

China debt fears grow amid wave of corporate defaults

Beijing wants to cut risk and end notion that state will always rescue investors

A swath of failures to repay principal or interest on outstanding bonds has sent this year's Chinese corporate default total to a record $25 billion and raised concerns in Shanghai of a looming debt crisis.   © Reuters

HONG KONG -- Not so long ago a Chinese bond default was barely heard of. Yet in the past two months, talk in the country's financial circles has been of little else.

A swath of failures to repay principal or interest on outstanding bonds has sent this year's default total to a record $25 billion and raised concerns of a looming debt crisis that could derail China's post-pandemic recovery. It follows a period in which Chinese companies have gorged on cheap borrowing, giving the world's second-largest economy one of the world's most debt-dependent corporate sectors.

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