“Nobody wanted the note to become overdue,” said Mr Liu, who works in the company’s bond department but who preferred only to provide his surname. “But since this has taken place already, we can only search for a method to reach a resolution and protect the rights of our bond holders.”

The company has warned that it is set to lose 3.3 billion yuan (US$491 million) this year, despite having turned a small profit in 2018, according to local media reports.

“In 2018, the pig breeding market wasn’t too good. We do not have an African swine flu problem within our company but the overall pig breeding industry in China was certainly affected by the swine flu problem,” added Liu.

“That is why in the second half of 2018, the pig breeding prices were so low.”

Chuying Agro-Pastoral’s situation is emblematic of an awful year all round for China’s private sector, which felt the brunt of a government drive towards deleveraging.

There is also a maelstrom of external factors over which companies have little control, including the US-China trade war and – in the case of the hog farming business at least – outbreaks of African swine flu.

China’s bleak private sector picture is laid bare by a report released on Thursday by trade credit insurer Coface that, above all else, illustrates the depths of the debt problems facing companies in China.

Record numbers of corporations are defaulting on their bonds, while companies are also taking longer than ever to pay their suppliers, as the private sector bears the wounds of a broad-based economic slowdown and a trade war that is weighing heavily on investment decisions.

As China’s economic growth slowed to 6.6 per cent last year, its corporate bond defaults quadrupled in value to US$16 billion, with the total number of bond defaults tripling to 119.

Meanwhile, fewer companies are being paid on time, with 40 per cent reporting that they have recorded an increase in payment delays, up from 29 per cent in 2018, Coface’s study showed.

In total, 62 per cent of Chinese companies experienced payment delays in 2018. Over the course of a year, the average time it took for Chinese companies to receive payment rose by 10 days to 86 days.

More worryingly, according to the insurer, is that just over half of companies are now waiting longer than six months for payments worth over 2 per cent of their total turnover.

“According to Coface’s experience, 80 per cent of ultra-long payment delays are never paid. When these constitute more than 2 per cent of annual turnover, a company’s cash flow may be at risk,” the report said.

The numbers feed into a worrying overall picture for the Chinese economy this year, with data across the board indicating a widespread downturn.

In February exports collapsed by 20.7 per cent, the largest decline in three years. Mobile phone sales plunged 19.9 per cent over the same period, while total vehicle sales tumbled for an eighth straight month in the world’s biggest car market.

Indeed, aside from construction, the car industry is the sector which has one of the worst payment cycles, according to Coface. Companies in these industries take the longest to be paid (106 days and 105 days, respectively) and are also heavily exposed to the downturns in investment and consumption in China.

These are also the two sectors with the most “ultra-long” payment delays – with 28 per cent of payments in the construction sector and 27 per cent of car industry payments outstanding for longer than 180 days and unlikely to ever be paid.

This, again, creates cash flow problems and could lead to more defaults in already troubled industries.

The bond defaults and delayed payment periods do not exist in isolation, said Carlos Casanova, Asia-Pacific economist at Coface.

“A combination of tighter liquidity and elevated bond maturities led to a large number of respondents stating that they were experiencing payment delays due to their customers’ lack of financial resources,” he said.

“Tighter liquidity was further exacerbated by the government deleveraging campaign and curbs on the shadow banking sector in the first half of 2018.”

To compound matters, the car industry is looking down the barrel of a potential hammering from the US government, which is mulling a new and potentially more damaging chapter to the trade war tariffs on the global car and car parts industries, which account for 8 per cent of world trade.

China’s electricity output, a measure of industrial activity, rose 6.7 per cent in February, while cinema box office revenue, an indicator of consumer habits, reached a record high over the Lunar New Year holiday, said Ning Jizhe, the head of National Bureau of Statistics this week.

Chinese businesses, however, are not basking in the glow of positivity, and for the first time in the 16-year history of the Coface survey, a majority of companies (59 per cent) expect lower growth this year, up from a third last year.

According to ratings agency Fitch, 86.7 per cent of bond defaults in China in 2018 were by private sector firms.

“We do think the private companies are more vulnerable than SOEs to external funding market volatility and therefore face greater liquidity and refinancing risk under tight credit conditions,” said Zhang Shuncheng associate director, corporate research at Fitch Ratings.

“Defaults by private companies have outnumbered those by SOEs by a wide margin in the onshore market, even though private companies have a far lower share by issuer count and principal amount than SOEs.”

In terms of scale, meanwhile, Chuying Agro-Pastoral’s defaults represent a drop in the ocean.

CEFC Shanghai International Group, an energy company, defaulted on bonds worth 17.1 billion yuan (about US$2.54 billion), while another energy company, Wintime, defaulted on bonds worth 12.66 billion yuan.

But Chuying Agro-Pastoral illustrates the widespread problems facing private companies in China, many of which are overladen with debt and facing an uncertain future.

“It is hard to say what the arrangements will be at this point before a resolution is reached,” said Liu. “We can only do our best.”