Published: 5:02am, 18 Jul, 2018 Updated: 5:02am, 18 Jul, 2018
Most of China's private companies have to rely on alternative areas for funding, such as shadow banking, since they have restricted access to mainstream banks. However, with the Beijing government cracking down on shadow banking, causing off-balance-sheet funding to plummet by CNY1.3tn ($190bn) in H1 2018, private businesses have become the biggest losers, with some resorting to loan sharks for financing. This has become apparent in China's corporate bond market where, by early June, 20 corporate bond defaults totalling CNY14.2bn took place, many of them by listed private firms. Furthermore, the increasing default risks have hit private companies' bond ratings.