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A Chinese government-owned company just defaulted on its debt. It's a worrying sign for the country's economy

A Chinese government-owned company just defaulted on its debt. It's a worrying sign for the country's economy
REUTERS/Guang Niu



Qinghai Provincial Investment Group failed to pay an $11 million interest payment on a offshore $300 million bond on Friday, the first time a state-owned Chinese company has done so for 20 years.




It's another sign of the increasing strain on debt-loaded provincial governments in China.




Despite attempts to loosen lending conditions in recent months, China's slowing economy is negatively impacting default rates — now worryingly extending to state-owned companies.



China's slowing economy has led to companies in the country defaulting on their debt. But state-owned companies, with their sturdy shield of government ownership, haven't followed suit.
That was until Friday, when, for the first time in two decades, a China-owned company failed to make a payment on its debt burden.
Qinghai Provincial Investment Group (QPIG), which was downgraded by S&P Global Ratings to junk status, failed to pay an $11 million interest payment on a offshore $300 million bond last week.
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