China has suffered what has been called its first corporate bond default, as the government tries to make its financial system more market-orientated.
A Shanghai-based manufacturer of solar panels paid only part of the 90 million yuan (£9m) in interest due on Friday for bonds issued in 2012.
Chaori Solar Energy Science and Technology had earlier warned it would struggle to make the payment.
According to two bondholders hit by the default, only 3% of the due amount was paid.
The solar industry has been heavily criticised in the past for levels of state subsidies.
Competitor nations including the United States, and Germany - Europe's largest solar user - have been vociferous critics of Chinese state support in the sector.
Manufacturers in the US and Germany have struggled as cheaper Chinese panels flooded their markets.
Beijing has previously bailed out troubled companies in an attempt to maintain confidence in its credit markets.
However the ruling Communist Party has promised to make the domestic market more productive and competitive.
Chinese citizens have complained that bailouts have not encouraged a need for risk aversion by big businesses.
Legal representatives for the bondholders hit by the default said they would pursue the money owed.
Lawyer Gan Guolong said: "The default today is already an established fact. We will definitely help recover bondholders' interests through relevant legal action."
A commentary published by the official Xinhua news agency hinted that government policy over defaults was hardening.
"The episode should help reduce the moral hazard caused by the widespread assumption that an almighty government will always bail out underwater investments with taxpayers' money," Xinhua said.
"That, after all, is the market playing its own decisive role."
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