Fisher: Why Rising Corporate Debt Defaults Are Good News for China

Western pundits are at it again, fearing Chinese debt. The recent uptick in corporate defaults — including some state-owned firms — has many claiming Chinese corporations have too much debt, not enough cash and are creating a harsh future. They argue a bad debt tsunami is set to flood the Middle Kingdom. They miss a bigger, more important point. China’s increase in debt defaults lacks the size and scope to derail China’s economy — and it isn’t a sign that greater trouble lies ahead. It’s the opposite! It is a byproduct of China’s increased willingness to allow free market forces in the economy. That’s bullish for China — and the world. Let me explain.