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Defaults surge in China as companies suffer credit crunch

Missed debt payments spread to overseas investors

The People's Bank of China in Beijing. President Xi Jinping's government has pressured banks to refrain from lending money to unworthy clients, triggering a cash crunch.   © Reuters

SHANGHAI/BEIJING -- Defaults on Chinese corporate debt are swelling, and are now extending to foreign-currency-denominated bonds, bought mainly by overseas investors.

Companies have defaulted on at least 20.7 billion yuan ($3.19 billion) in yuan bonds and $350 million in dollar debt in the six months through June, marking a 40% increase compared to the same period last year. The government's deleveraging campaign and a crackdown on shadow banking have left more businesses strapped for cash.

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