(Photo: Xinhua)

The trend of domestic corporate debt defaults is due to China's supply side reform and therefore is within expectations, industry analysts said in response to a report by S&P Global suggesting that defaults will continue rising in 2020.

Chinese companies' maturing onshore debt could rise to 6.5 trillion yuan ($945 billion) this year from 6.3 trillion yuan last year, while offshore debt could exceed $90 billion, according to a report by US-based publicly traded corporation S&P Global on Thursday.  

Lu Zhengwei, chief economist of Industrial Bank Corp, told the Global Times on Sunday that the debt trend is within the strategic deployment of China's supply-side economic reform.

"Cutting capacity means that some companies will eventually fail, and it will default on its debt, which is a hurdle that we have to go through," Lu said, adding that one should not be overreacting by this.

Hong Tao, director of the Institute of Business Economics at Beijing Technology and Business University, told the Global Times that in the process of transformation, some enterprises will lose money or go bankrupt, meaning more debt defaults.

"Enterprises should learn to manage their working capital in a professional way, reduce costs, improve efficiency and speed up inventory turnover," Hong said.

Yi Huiman, chairman of the China Securities Regulatory Commission, told a conference in December 2019 that China will continue to improve risk management, coordinate local governments to achieve synergy, and support market institutions in using debt restructuring and bankruptcy restructuring in a comprehensive way to defuse existing risks.