Investors Are Learning to Live With China’s Credit Defaults Bloomberg 12/14/2020 Bloomberg News (Bloomberg) -- China’s authorities are increasingly spreading the message: you should get what you pay for when it comes to corporate bonds. Popular Searches Beijing is allowing a wave of defaults by state-linked companies in the country’s $15 trillion credit market. Last week, prominent chipmaker Tsinghua Unigroup Co. defaulted on $450 million of dollar debt triggering cross-defaults on another $2 billion -- equivalent to almost two-thirds of the total defaulted debt in China’s offshore bond market in 2019. While this may be bad news for the weakest state-owned enterprises, it’s an improvement for investors, the credit market and China overall. A more accurate pricing of risk gives buyers of bonds greater transparency in a relatively opaque economy. That would boost the allure of Chinese debt, drawing more inflows, which in turn would help reduce the reliance of the nation’s capital markets on the government. State banks are among the biggest buyers of onshore corporate debt.