This figure reports the number and the amount of defaulted bonds, both in absolute value (first chart) and in percentage relative to all corporate bonds (second chart). Before 2014, investors believed that bonds were implicitly guaranteed by government. The burst of defaults in 2016 was driven by the tightened liquidity and deepening financial deleveraging campaign of the government. Although the percentage of defaults reaches its highest peak (0.6%) in 2018, it is relatively low compared to the global counterpart which is 1.8% during 2008-2017 according to a recent report by Moody’s.

Source: Handbook on China’s Financial System: Chinese Bond Market and Interbank Market, by Marlene Amstad and Zhiguo He

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