The surprise default that threw China's corporate bond market into turmoil last month can be traced to massive, unprofitable investments a decade ago in ethylene glycol, a toxic but useful industrial chemical that Chinese factories consume in vast quantities.
The business case seemed sound in 2010 for the state-owned coal mining operations of central China's Henan Province to diversify into the product, which can use coal as a raw material. But the leader of Henan Energy and Chemical Industry Group who initiated the investments was later convicted of corruption and imprisoned.
