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China Insights

Monthly update on Chinese markets
24 May 2021
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    • The Chinese government’s increasing tolerance toward state owned enterprise (SOE) defaults have contributed to recent rising default rates in the onshore and offshore bond markets
    • In 2018, onshore bond defaults concentrated in industries with overcapacity namely energy, utilities, industrials, and materials; whereas last year 40 per cent of defaults by outstanding amount were in technology
    • Credit differentiation is deepening in the SOE space as investors come to realise that the implicit government guarantee behind state owned enterprises is weakening