News Analysis China’s real estate sector defaults are now spreading to other parts of the economy, with commercial paper and local government debts set to become the next crises. Shanghai Commercial Paper Exchange reported that companies controlled by real estate developers—Shimao Group Holdings, Kaisa Group Holdings, and Greenland Group—have been “consistently overdue” on commercial paper payments. Commercial paper is a short-term debt instrument, frequently used by companies in China. The number of delinquent firms in China increased by 26 percent in December. In total, 484 companies were overdue on at least three commercial paper payments in the final quarter of 2021. The sharp increase in defaults demonstrates a lack of liquidity in the market. The list of defaults has now expanded from real estate companies to materials suppliers and construction companies, suggesting that the real estate sector crisis is beginning to drag down other types of companies as well. Minsheng …