China Inc.
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China is turning the screws on the nation’s companies…China’s central bank tightens financial conditions, making it harder for both state-owned or private firms with inadequate cash flow to survive.
Bond defaults rose to a record $30 billion in 2020, including high-profile enterprises that had previously counted on the implicit guarantees of the state. Scrutiny and punishment of credit-rating agencies are increasing, while domestic exchanges delisted at least 16 stocks from their main boards last year – the most in data going back to 1999.
“The good thing is China will keep financial risks under control, but the bad thing is it won’t bail out firms unless they are in an extreme situation,” said Larry Hu, head of China economics at Macquarie Group Ltd.
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