C.banker says defaults may be good for China markets - paper
SHANGHAI, March 24
SHANGHAI, March 24 (Reuters) - Some debt defaults could be positive for market discipline in China and help the wealth management products market develop in a more healthy way, an influential state-run newspaper on Monday quoted deputy central bank governor Pan Gongsheng as saying.
To help prevent systemic risk, "naturally occurring" defaults may be "conducive to strengthening market discipline constraints, correcting the behaviour of product issuers and investors, and also conducive to the healthy development of the wealth management market," the Shanghai Securities News quoted Pan as saying.
Earlier this month, loss-making Shanghai Chaori Solar Energy Science and Technology Co Ltd missed a bond interest payment, the first such domestic bond default of its kind and an event seen as a landmark for market discipline in the world's second-largest economy.
The Chaori default followed a series of near misses in recent years in which local governments stepped in at the last minute to rescue local champions.
Speaking at a March 13 news conference, Chinese Premier Li Keqiang signaled that the government would not ride to the rescue of every troubled investment by saying some loan defaults are "hard to avoid" in what he called a challenging economic environment.
Growth in Chinese corporate debt has been unprecedented. A Thomson Reuters analysis of 945 listed medium and large non-financial firms showed total debt soared by more than 260 percent to 4.74 trillion yuan ($777.3 billion) between December 2008 and September 2013. (Reporting by John Ruwitch; Editing by Shri Navaratnam)