Chinese capitalism - first default on bond payments

WSJ reports that Chinese state owned banks have let a company default.  This might be the first company default and whilst seemingly bad news (certainly for investors in Shanghai Chaori) it shows that China is prepared to let companies go under.  In the long run this has to be good news.

As an aside for environmental readers - it is not surprising it is a solar company.  Massive over capacity.

Shanghai Chaori in Default on Bond Interest Payments [Wall Street Journal]

BEIJING—A Chinese solar-equipment maker on Friday failed to meet interest payments on a bond, according to a company official there, becoming China's first domestic corporate bond default.

Liu Tielong, board secretary of Shanghai Chaori Solar Energy Science & Technology Co., said on Friday that it was in default. The heavily indebted company had warned on Tuesday that it wouldn't be able to meet interest payments totaling 89.8 million yuan ($14.7 million), citing a credit squeeze and its inability to raise enough funds to make the interest payments.

The default, though small in size, marks the first time a Chinese company has defaulted on a bond traded in the mainland, according to Moody's Investors Service.