Relations between the United States and China promise to be fraught even under President-elect Joe Biden’s administration, Bloomberg News reported in a commentary. There’s one area where the two rivals can and should cooperate immediately, however: to head off a looming debt crisis that threatens to hurl millions into poverty across Africa, Latin America and Asia. When many of the world’s poorest countries last found themselves unable to service their debts 25 years ago, the U.S. led a global effort — the 1996 Highly Indebted Poor Countries Initiative — to forgive much of that debt.

China is bucking the global trend of greater economic stimulus amid the coronavirus, preferring instead to refocus on controlling its record debt burden, Bloomberg News reported. Policy makers are allowing for tighter liquidity in the financial system, a signal that Beijing wants to stabilize the level of debt in the economy. Though not as aggressive as previous deleveraging drives, the shift is pushing up market rates: government-bond yields trade near an 18-month high and interbank borrowing costs last month jumped to the highest since January.

Creditors of China’s Yongcheng Coal & Electricity Holding Group Co have agreed to repayment plans for two commercial paper issues after the state-owned miner defaulted on them in late November, underwriters said on Friday, Reuters reported. Defaults by highly rated Chinese state firms including Yongcheng caught the world’s second-largest bond market off guard last month and prompted speculation that Beijing may be renewing a deleveraging push interrupted by the COVID-19 pandemic.

China’s fast growing $15tn onshore bond market has been rattled by a wave of defaults by state-owned enterprises that threaten to expose systemic weaknesses across the financial system of the world’s second-largest economy, the Financial Times reported. More bond defaults are expected to follow as Beijing has indicated that it is no longer prepared to help state-owned debtors that run into trouble. But the ending of China’s deeply entrenched system of implicit government guarantees has left investors struggling to price credit risks.

Rising defaults by China’s state firms are showing the need for bond investors to be much savvier about those borrowers -- no easy feat in a country where government decisions and business operations lack transparency, Bloomberg News reported. Five state-linked companies -- from a coal miner to a top chipmaker and an auto firm with ties to BMW AG -- have defaulted for the first time in the onshore bond market this year. That’s the most since 2016.

The shares of Chinese property developers have been a short seller’s nightmare for more than a decade. Nothing seemed able to dent the rally. That has now begun to change, the Financial Times reported in a commentary. Superficially, October was good for Chinese real estate. A rebound in activity pushed new home sales by floor area to their highest levels in recent months. Investment rose 13 per cent while property sales jumped 15 per cent. New construction starts grew 3.5 per cent, compared with a decline in the previous month.

Chinese industrial activity has snapped back to pre-coronavirus growth levels, with factory surveys hitting multi-year highs in November, but the headline expansion masks struggles for smaller firms and looming pressures for exporters, Reuters reported. Readings from the official and Caixin’s Purchasing Managers Indexes hit three- and 10-year highs respectively last month, a reflection of the industrial sector’s strong overall recovery. Official data also shows industrial profits for large firms grew at their fastest pace since 2017 in October.

As debt defaults for state-owned enterprises in China rise, international investors find themselves in what for most is a new place: Chinese bankruptcy courts, Bloomberg News reported in a commentary. That may be just the right venue for them, debtors and regulators to meet and take a crucial step toward a better functioning economy. Investors have been spending years to recover their money out of court, but China’s bankruptcy law has now gained enough critical mass to test in modern markets.

Shares of Evergrande Property Services fell marginally on their Hong Kong debut on Wednesday, shedding initial gains as the spinoff of China’s second-largest property developer struggled to shake off worries about debt and competition, Reuters reported. Concerns about the financial health of its parent, China Evergrande Group, have clouded Hong Kong’s third-largest listing of the year, with China’s most indebted developer planning to use half the $1.8 billion raised for its own debt repayment.

China’s credit rating agencies are standing by their triple A scores for troubled state-owned enterprises, even as a series of defaults reverberates through the country’s $4tn corporate debt market, the Financial Times reported. Just five Chinese companies out of more than 5,000 have been downgraded to below double A ratings by domestic rating agencies since Yongcheng Coal and Electricity Holding Group, one of the country’s largest coal groups, kicked off a spate of defaults last month, according to data provider Wind.