As the OP correctly points out, for the past three decades, domestic and foreign banks, bond funds, and other lenders and investors have lent money to Chinese c

As the OP correctly points out, for the past three decades, domestic and foreign banks, bond funds, and other lenders and investors have lent money to Chinese companies on the assumption that they would always be bailed out by the Chinese government. As a result (quoting from the OP), "loan and bond portfolios have been built around political perceptions and pressures rather than around credit risk and the portfolio needs of creditors, and there has been very little discrimination in credit pricing." I couldn't agree more. If the Chinese government does not bail out Evergrande creditors, the OP believes -- and I agree -- that the country's credit markets would see a "major repricing of credit and a corresponding reallocation of credit risk portfolios." That's a polite and elegant way of saying that if Evergrande is allowed to fail, things could get frakked up in China for a good while.