The writer is chief economist at Enodo Economics
Just how bad is the economic distress rippling through the Chinese economy? The bankruptcy of China’s largest private real estate company, Evergrande, has generated international attention. But the travails of China’s small and medium-size firms are less documented, and now new rules designed to reduce risk are further stressing small borrowers that need credit to survive.
While firms like Evergrande represent a risk because of their size — the company’s liabilities are estimated at $300bn — defaults by local firms reflect the breadth of the trouble in the Chinese economy with SMEs providing 80 per cent of urban employment.
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