"... and even dragons have their ending.” - J. R. R. Tolkien
China is braced for a wave of industrial bankruptcies as its slowing economy forces companies with sky-high debts to the wall, the country's premier has said.
Premier Li Keqiang told lenders to China's private sector factories they should expect debt defaults as the world's second largest economy encounters "serious challenges" in the year ahead.
However, figures this week revealed that Beijing is copying the Japanese tactic of ramping up public infrastructure spending to replace the steep slowdown in private sector investment. Fixed asset investment, a measure of government spending on infrastructure, expanded 17.9% during the first two months of 2014, the National Bureau of Statistics said.
As Peter Grant has pointed out, there is more to the story than just a few insolvent companies in China. He has a much more detailed write up on the high points of the current situation that is well worth reading, if you have the time. If you don't... well, the tl;dr summary is, as he puts it, "the signs don't look healthy".
We live in interesting times.