So far this week, China has witnessed a default by a major property developer and another by a state-owned company. Dubious firsts, to be sure, but they couldn't have come at a better time. They provide a dose of market discipline that China sorely needs.
The country's 7 percent growth in first-quarter gross domestic product can’t mask the flashing-red indicators that its economy is running into trouble. Industrial output, fixed-asset investment and retail sales have all slowed; land sales are contracting. The industrial sector's 6.1 percent growth outpaced retail and wholesale trade, according to Bloomberg Intelligence, suggesting that the vaunted shift from manufacturing to services isn't happening as hoped. Prices are falling almost across the board.
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