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China's corporate bond defaults reveal vast hidden vulnerability

Xi Jinping should let companies incur pain to clean up economy

| China
The real trouble is a chain reaction risk.   © Reuters

While investors and the media obsess over Chinese President Xi Jinping's ability to keep top-line economic growth at 6% this year, the real action -- the real threat -- is unfolding beneath the surface of China's strained financial system.

The world's second-biggest economy ended 2019 with record corporate bond defaults, a result of the slowest growth in nearly three decades. More than 150 onshore companies reneged on debt payments totaling about $19 billion. That was up from 120 companies and $17.6 billion in 2018.

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