While hedge fund Kyle Bass predicted the demise of Hong Kongs Art Basel as the canary of the dangerous Chinese coal mine, Bloomberg brought up more bad news for East Asia, Chinese bond defaults are spiking, Winnie the Pooh, aka President Xi has loosened bank lending requirements to avert a catastrophe but some big is coming right at them.
Chinese companies are facing a reality check after years of ramping up debt. A de-leveraging campaign that President Xi Jinping began in 2016 to curb risks in financial markets has led to a crackdown on unregulated lending -- so-called shadow banking -- and tighter rules on asset management. That made it harder for some to raise funds to repay existing debt, leading to a record number of bond defaults in 2018 and 2019 as economic growth slowed. Contrary to what many investors thought, state-owned borrowers can’t count on a bailout.
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