A listed Chinese solar company said it will not be able to repay interest on a corporate bond due tomorrow in what would likely be the first onshore corporate default of its kind in China.

Shanghai Chaori Solar Energy Science & Technology Co, a producer of solar cell components, won't be able to pay interest of 89.8 million yuan (US$14.6 million) on a 1 billion yuan bond issued in March 2012, the company said in a filing to the Shenzhen Stock Exchange late on Tuesday.

The payment is due tomorrow but the company can only pay 4 million yuan to bondholders due to "uncontrollable factors," the filing said.

Shares of the loss-making solar equipment maker have slumped over 40 percent in the past 12 months. Trading in its shares has been suspended since February 19.

Default risks are rising among China's heavy manufacturers who are dogged by crippling overcapacity, increasing debts and dismal market demand amid a cooling economy.

"Credit risk is rising as a large number of bonds and trust products related to steel, metal and coal sectors will mature in the second quarter," Ping An Securities said in a report yesterday.

A high-yielding 3 billion yuan trust product issued by China Credit Trust Co and distributed by the Industrial and Commercial Bank of China was about to default in January. The trust firm and investors finally agreed to allow the latter to recover their invested principal before its maturity at the end of January, but not the interest.

However, Fitch Ratings said a default would be positive for China's economy in the long term.

"We see onshore corporate credit defaults as a long-term positive for China's financial system as it should instill greater market discipline and lead to a more efficient allocation of capital among corporate borrowers," Fitch said in a note yesterday.