Over the past two decades, a handful of private entrepreneurs transformed Zouping county in China’s Shandong province from a rural backwater best known for its yams into an industrial hub home to one of the world’s largest aluminium producers.

But the years of aggressive, highly leveraged expansion have also turned Zouping and several neighbouring counties into a hotspot for corporate defaults, most recently with privately held corn oil producer Xiwang Group’s failure to repay a Rmb1bn ($143m) bond.

The distress in Shandong has become a harbinger for financial risk across the country this year. A wave of defaults on corporate bonds has pushed China’s private sector default rate to a record 4.9 per cent as of the end of November, according to Fitch Ratings, up from 0.6 per cent in 2014.