Underlining the concerns about market stability, the central bank intervened in money markets last week, worried that lenders were too dependent on short-term funds to finance bond positions. Bond market prices in China suggest the smallest likelihood of companies being allowed to go bankrupt in recent years , despite the Chinese government 's pledge to eradicate zombie companies earlier this year after a number of unexpected debt defaults by large state - owned enterprises . Contradictory messages and swings in sentiment are liable to prey on investor confidence and increase the risk of financial instability in debt markets . The crisis appears to be coming on the back of concerns that while China continues to toughen its economy state - owned company defaults could undermine investment , which is already at a 16-year - low .
Bond market prices in China suggest the smallest likelihood of companies being allowed to go bankrupt in recent years , despite the Chinese government 's pledge to eradicate zombie companies earlier this year after a number of unexpected debt defaults by large state - owned enterprises . Contradictory messages and swings in sentiment are liable to prey on investor confidence and increase the risk of financial instability in debt markets . The crisis appears to be coming on the back of concerns that while China continues to toughen its economy state - owned company defaults could undermine investment , which is already at a 16-year - low .