China’s onshore bond market experienced its first default as a solar-cell maker failed to pay full interest on its bonds, signaling the government will back off its practice of bailing out companies with bad debt.
As a young man during China’s Cultural Revolution, Jiang Jianqing was sent to the countryside to work as a farmer and a coal miner. This week, he arrives at the top of a Swiss mountain as chairman of the world’s most- profitable bank and representative of the most-populous nation.
The story of how a 3 billion-yuan ($496 million) Chinese trust investment wound up on the brink of default shows what billionaire investor George Soros has called the “eerie resemblances” between the 2008 global financial crisis and the nation’s debt market.
Industrial & Commercial Bank of China Ltd. and China Credit Trust Co. may together with the government bail out investors in a troubled trust that sparked concern of defaults on high-yield investment products, according to the Time-Weekly newspaper.
Investors in a troubled trust product distributed by Industrial & Commercial Bank of China Ltd. met with the lender’s officials at a private-banking branch in Shanghai, demanding their money amid concern of a default.
China faces many challenges in its efforts to maintain the health of the banking industry, including risks from local government financing vehicles, property loans and industrial overcapacity, bank regulator Liu Mingkang said.
China needs to speed the pace of domestic reform and change its economic model to become less reliant on exports and reduce the impact of crises such as the one roiling Europe, said former banking regulator Liu Mingkang.