China says its economy is back on track. It says it is the only country that will show some positive GDP growth this year.
REALLY??
Scratch the surface:
Why are Chinese corporate giants sinking? There has been a string of defaults from Chinese companies. And mind you these are not any teeny-weeny Chinese companies; these are govt. back giants. From Jan-oct 2020 Chinese companies have defaulted to record $6.1 Billion.
China is the world’s second-biggest creditor, but it cannot keep it up with its own EMIs. And even worse is that the Chinese govt. has shown reluctance to bail out any of them.
1. Brilliance AUTO Group: Its BMWs partner in china. Default $987 Million.
2. Tsinghua UNIgroup: State-owned. Default $450 Million. It further has a $2 billion debt.
3. Yongcheng coal & electricity: Know as china’s grey rhino. Default $152 Million. This bond was rated AAA. The highest possible rating any bond can get and considered to be safest.
A bit more: All these companies are govt. owned. Investors invest in govt. backed companies thinking Safety. Sadly that’s no more true there.
Shocked… Do not be. Chinese growth over the decades has been backed by low-cost debt. It is repayment time now.