Well, one extreme case suggests 90%! Reuters reported this week (HT to Almost Daily Grants) that Country Garden, the large Chinese property developer that defaulted on it’s external bondholders has offered up new debt instruments with extended payback, or cash with a 90% haircut! Maybe the property sector is worse than the other capital misallocation that is characteristic of the Chinese government’s industrial policy, or maybe it’s better because at least Country Garden was not a State Owned Enterprise (SOE). Regardless, getting 10 cents on the dollar is a pretty poor return.

Tell me again why we want Xi Jingping, or Joe Biden or Donald Trump/JD Vance industrial policy?