Corporate bond defaults seemingly absent in China onshore market...Taiwan adds Huawei, SMIC to trade blacklist...China to remove all tariffs on African exports

Corporate bond defaults seemingly absent in China onshore market

There has been only one first-time default in China’s $4 trillion onshore corporate bond market so far this year, according to data from S&P Ratings, reports the Financial Times. That compares with 16 in 2024 as a whole, and multiple defaults by this stage in every year since 2013. And as China grapples with a trade war, a four-year property slowdown and lingering weakness in consumer confidence, this typical gauge of corporate distress has been conspicuous by its absence.

Rather than a definitive indication of corporate distress across the economy, the absence of defaults points to a marked change in tone during the recent development of China’s financial markets.

A 21st century move closer towards international norms, for which the US was both a driving force and a blueprint, appears in many areas to have lost momentum.

Taiwan adds Huawei, SMIC to trade blacklist

Taiwan added Huawei Technologies and Semiconductor Manufacturing International Corp (SMIC), two of China’s leading chipmakers, to a trade blacklist a mid an intensifying tech rivalry between China and the US, reports the South China Morning Post. The International Trade Administration of Taiwan included Huawei, SMIC and a host of their subsidiaries in a Strategic High-Tech Commodities Entity List, according to the updated list published by the island’s Ministry of Economic Affairs on its website on Saturday.

The entity list barred both companies from acquiring key semiconductor technologies from Taiwanese companies, dealing a blow to China’s chipmaking ambitions to rival US producers like Nvidia.

Beijing sees self-governed Taiwan as part of China to be reunited by force, if necessary. Most countries, including the US, do not recognise Taiwan as an independent state, but Washington is opposed to any attempt to take the island by force and is committed to arming it.

China to remove all tariffs on African exports

China will negotiate and sign a new economic pact with Africa that will get rid of all tariffs on the 53 African states it has diplomatic ties with, it said, a move that could benefit middle-income nations, reports Reuters. The Asian economic giant offers duty- and quota-free market access to least developed countries (LDCs), including many in Africa, but the new initiative will level the playing field by also offering middle-income countries similar market access.

"China is ready to... welcome quality products from Africa to the Chinese market," China's foreign ministry said after a meeting of senior Chinese officials with African foreign ministers in Changsha to review implementation of commitments made during a summit in Beijing last September.

In recognition of the significant disadvantages that businesses from LDCs like Tanzania or Mali could face from their more developed counterparts like South Africa once the market is fully opened, China pledged additional measures to support LDCs, including training and marketing promotion.

China delays US chip merger approval

A $35 billion US semiconductor industry merger is being delayed by Beijing’s antitrust regulator, after Donald Trump tightened chip export controls against China in a move that exacerbated trade tensions between the world’s two largest economies, reports the Financial Times. China’s State Administration for Market Regulation has postponed its approval of the proposed deal between Synopsys, a maker of chip design tools, and engineering software developer Ansys, according to two people with knowledge of the matter.

The transaction between the American groups, which has received the blessing of authorities in the US and Europe, had already entered the last stage of SAMR’s approval process and was expected to be completed by the end of this month, said the people.

The delay comes as Washington moved to ban chip design software sales by US companies, including Synopsys, to China in late May. That decision has contributed to the complexity of China’s approval process for this deal, according to a person with knowledge of the situation.

China home prices fall at faster pace

China’s new-home prices fell the most in seven months in May, underscoring why senior government officials are renewing pledges to revive the property market, reports Bloomberg. New-home prices in 70 cities, excluding state-subsidized housing, dropped 0.22% from April, when they slid 0.12%, National Bureau of Statistics figures showed Monday. Values of used homes fell 0.5%, the sharpest decline in eight months.

The figures suggest the effects of a stimulus blitz last September is wearing off. A truce on US tariffs has done little for the world’s second-largest economy as falling prices erode corporate profits and employee incomes. That has led to suppressed demand for housing purchases, which policymakers are struggling to rekindle.

“We see China’s property downturn continuing in 2025, but with a smaller decline of property activities than in 2024,” UBS Group AG analysts led by Ning Zhang wrote in a note last week.

Disappearing defaults

There has been only one first-time default in China’s $4 trillion onshore corporate bond market so far this year, compared with 16 in 2024 as a whole, and multiple defaults by this stage in every year since 2013.

While it could simply be the case that companies have avoided default so far this year, the cynical view is that businesses aren’t getting healthier, rather they are not being allowed to default through some means or other. Kicking the can down the road has often been a tactic used in China, and in some cases it has worked, but it raises the question of whether and when the consequences will be felt.