China has seen a succession of corporate defaults, driving up the country’s debt storm. Many of the defaults this year have come from the so-called “too big to fail” state-owned enterprises.
It’s the latest financial news in a market known for opacity, heavy borrowing, and unreliable credit-ratings.
NTD talked to Business Professor Frank Tian Xie of the University of South Carolina Aiken to discuss why the defaults took place.
“They have been in debt heavily in debt for decades, and decades. So now when the demand for energy is slow, and the company is not doing well, of course, they’re going to default on their, on their bond on the debt,” he said.
Many of the defaulting companies were given AAA ratings by Chinese state-owned rating agencies. Frank accuses them of outright lying.
Because of the risky Chinese investment environment, not many people buy Chinese bonds. So who still does?
Frank believes China will face a deeper recession because export markets are shrinking and supply chains are moving out. He ended the interview with a dramatic prediction—that the collapse is coming.