Building credit: China's CDS market faces headwinds

As structural reforms push up defaults, China’s regulators are working to put in place a credit default swap market. However, without reforming the regulatory fragmentation that plagued previous attempts, market participants fear new efforts will also fail

Work in progress: some Chinese banks and regulators are trying to develop a framework for a new CDS

In the first six months of this year, China saw a record number of credit downgrades and bond defaults as supply-side reforms curtailed the public support that kept failing companies alive for so long. But you wouldn't guess it by looking at the country's stagnant credit-protection market.

A group of Chinese banks and regulators are trying to develop a framework for a credit default swap (CDS) instrument that is more in line with international markets than its current domestic credit derivatives