Red lights flashing in China as Huarong plunge stokes market contagion fears – Sydney Morning Herald

Chinas credit market is entering a new era as SOEs are emerging as the main source of stress, said Shuncheng Zhang, an analyst at Fitch Ratings. Whatever the outcome for China Huarong, policy makers will likely allow more defaults in the state sector to reduce moral hazard and cultivate a more mature debt market, he added.
Its unclear whether Chinese leaders have discussed the fate of China Huarongs bondholders, but there are signs authorities might be preparing to provide support to the company…

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