China’s Bond-Market Mystery: Why Aren’t There More Defaults?

Beijing is working to maintain stability, even as it tries to tackle its key economic problem, analysts say

SHANGHAI—Beijing’s determination to tame China’s soaring debt levels has won plaudits from bullish observers who believe the government is finally tackling its key economic problem.

Why, then, has there been so little stress in the country’s bond market?

Defaults on Chinese bonds might appear to have risen sharply this year, in volume terms....