A debt default is generally not cause for celebration. Not defaulting, by contrast, should be a good thing. But in China, a lack of defaults has said more about inadequate processes for dealing with failing companies than it does about their financial health — not to mention a lack of political will to allow companies to fail. That is slowly changing.

Lately, defaults have been rising as the government tries to restructure ailing state-owned enterprises. Wind, a data service provider, notes a “flurry” of defaults in the past three months, bringing the accumulated total of sour loans to $8bn — three times higher than at the end of last year. SOEs, once considered immune, account for nearly half of that.

As part of its push to open its markets to international capital, China is keen to stimulate overseas interest in its debt. Although the third-largest domestic bond market in the world, and growing rapidly, China’s fixed income market totalling nearly $10tn is still less than a third of the US market’s value. In an effort to grow, regulations regarding foreign investor access have been loosened. Last year the interbank bond market, which accounts for the majority of bond trading in China, was opened to qualified foreigners.