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China debt crunch

China's $2.14tn of bonds coming due unnerves foreign investors

Country faces massive debt servicing costs for infrastructure by 2023

A G79 Fuxing bullet train leaves the Beijing West Station in Beijing. China State Railway Group, which is run directly by the government, will redeem around $90 billion of bonds by the end of 2023.   © Reuters

SHANGHAI -- The problem of heavily indebted state-backed companies in China is starting to spook investors in global corporate bonds.

As liabilities balloon at Chinese civil engineering and construction companies engaged in public works projects to shore up the economy, premiums on foreign currency-denominated are rising. The bonds are under selling pressure because investors believe the Chinese government will no longer bail out state-owned enterprises. A sudden spike in defaults by big corporate borrowers in China could rattle global markets.

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