China’s state-directed economy could be setting the stage for a new wave of bond defaults, potentially starting next year, according to S&P Global Ratings. This would mark the third round of corporate defaults in about a decade, coming after a period of extremely low defaults in China. The concern stems from the government’s directives to discourage defaults and directives targeting the real estate sector, which has dragged down the economy. The slowing growth and vulnerability of sectors like tech, consumer, and retail further exacerbate the situation. While some analysts see positive signs in corporate earnings performance, the overall economic outlook remains uncertain.