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Illustration: Aïda Amer/Axios

China Evergrande’s debt problems aren’t an anomaly. Signs of stress are piling up in China’s real estate development sector, and more companies are signaling they may not be able to pay back their debt.

Driving the news: Fellow builder Modern Land asked its bondholders if it could delay a bond payment by three months, and Sinic said it will likely default next week, Reuters reports.

Why it matters: Widespread distress in the Chinese property market could bleed into other areas of its massive economy, as well as negatively impact the global markets for commodities and raw materials.

  • Watch for a domino effect among the builders.
  • Each company that acknowledges it can’t make debt payments makes it a little more palatable for others to join their ranks, Aayush Sonthalia, portfolio manager for emerging markets debt at PGIM Fixed Income, tells Axios.

State of play: Repayment is in doubt for any bonds issued by Chinese property developers that have lower credit ratings and an upcoming maturity, Sonthalia adds.

  • One reason: Chinese banks have tightened their lending standards. If a company doesn’t pass the “three red lines” test, it may not be able to get money to refinance.
  • On top of that, weak property sales data was just released. That's not a good sign for the developers’ ability to shore up their balance sheets.

The impact: The sell-off across the bond market has been broad. Even higher-quality investment-grade bonds backing Chinese developers are now trading in the 80 cents on the dollar area, Santhalia says.

What we're watching: The Chinese government's next move.

  • "Our view is that by the end of this year, we're going to see some further loosening of monetary conditions and possibly some fiscal support as well. The economy is so dependent on the sector ... they don't want a complete collapse," Santhalia adds.

Go deeper

China makes a show of opening up the internet for the Olympics

Illustration: Shoshana Gordon/Axios

The Chinese government has promised Olympic athletes free access to social media platforms and other websites in the Olympic Village in Beijing, but internet use may still be fraught with restrictions and risks.

Why it matters: China's aim in temporarily opening its "great firewall" is simply to boost its global reputation ahead of the Games, not to champion an open internet, experts say. And they expect heavy surveillance of online activity to continue, even for visitors who are allowed to access sites that would otherwise be blocked.

The front-runners for Biden's Supreme Court pick

Judge Kentaji Brown Jackson (left) and Justice Leondra Kruger (right) Tom Williams-Pool/Getty Images and Lonnie Tague, US Department of Justice

Two highly accomplished Black female judges — Ketanji Brown Jackson, a judge on the D.C. Circuit Court of Appeals; and Leondra Kruger, a justice on the California Supreme Court — are seen as the early front-runners to replace retiring Supreme Court Justice Stephen Breyer.

The big picture: Jackson is a powerful federal judge with a record that progressives feel they can trust. Kruger was a highly regarded litigator and has carved out a reputation for working well with conservative judges.

Fed: Rate hikes "will soon be appropriate"

The Federal Reserve's headquarters building. Photo: Anna Moneymaker/Getty Images

Federal Reserve officials expect "it will soon be appropriate" to raise the central bank's main target interest rate, setting the stage for a rate hike at its next meeting in mid-March.

Driving the news: In a statement following a two-day meeting published Wednesday afternoon, however, the policy-setting Federal Open Market Committee teed up its next move without taking new action.