The China contagion that never was

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The price of hedging China risk on world markets hasn’t fluttered during the past couple of weeks, which means that investors with real money on the line and speculators looking for a score aren’t worried about China’s property market.

Credit default swaps are a form of bond insurance that makes creditors whole after a default. They are quoted in basis points (100ths of a percent) above the cost of interbank funding. The cost of default protection on China traded Aug. 18 at 80 basis points, on the lower side of its historic range.

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