China: The Government Confronts the Increasing Risk of Default

On Aug. 15, the Sixth Division of State-Owned Asset Management, a military-affiliated company in western China's Xinjiang region, said that it had made up the repayment of bonds worth 500 million yuan ($73 million), two days after it missed the deadline to repay the loan that could have left the company in default. According to a statement, the local government financing vehicle (LGFV) made the overdue principal and interest payment on the morning of Aug. 15, narrowly escaping the fate of being the first government-linked financing vehicle to default in a decade....