Residential buildings under construction at the Phoenix Palace project, developed by Country Garden Holdings Co., in Heyuan, Guangdong province, China in September 2023.
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BEIJING — China’s state-directed economy may be creating the conditions for a new wave of bond defaults that could come as soon as next year, according to an S&P Global Ratings report released Tuesday.
It would be the third round of corporate defaults in about a decade, the ratings agency pointed out.
It comes against a backdrop of extremely few defaults in China amid concerns about overall growth in the world’s second-largest economy.
“The real thing to watch for policymakers is whether the current directives are creating distorted incentives in the economy,” Charles Chang, greater China country lead at S&P Global Ratings, said in a phone interview Wednesday.
China’s corporate bond default rate fell to 0.2% in 2023, the lowest in at least 8 years and far …