Wow. Would be to the advantage of the general US economy if a few more of our zombie companies were also allowed to fail.
The failure to develop a bankruptcy process in China means a worsening debt burden and even lower investment efficiency. But implementing a real bankruptcy process, in which bad lending decisions result in real losses, will cause a chaotic repricing of credit markets. Will they do it this time, or will they back away again? Doing it is better for China in the medium and long run, but painful in the short run, and in the past, Beijing has has always favored the short run.--Michael Pettis