The renewed jitters in China come after the authorities allowed solar company Chaori to default last week, the first ever failure in the country’s domestic bond market. The episode is a litmus test of President Xi Jinping’s new regime of market discipline, though the central bank has been careful to cushion the blow by engineering a fall in interbank interest rates. “Such adjustments are necessary for China in the long run, but are nothing if not risky in the short term,” said Ms Wei.