From Capital Markets Insight
Since the middle of the last decade, the Chinese government has taken steps to reduce moral hazard, the presumption that the state will bailout companies if a default would be sufficiently disruptive to the financial system. Recently, Chinese authorities have allowed several firms to
default on their debts without providing any assistance, even state-owned enterprises, but the authorities have engineered selective bailouts to forestall all-out bankruptcies of firms it deems to be systemically important by arranging rescues by state-owned lenders.
