Evergrande, Chinese debt and the implications for emerging markets

  • Evergrande's missed coupons seem trivial in the context of China's economy but are a symptom of a bigger problem

  • Arguments for paying the bonds, but that defers the problem and government bailout is inconsistent with state policy

  • Key risks to EM: higher risk aversion, portfolio contagion, slower China growth. Better risk pricing a long run positive
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