China's biggest manager of bad debts is trying to exit early from at least three loans and investments as it wrestles with a liquidity crunch triggered by an anti-corruption probe into its chairman, people with knowledge of the matter said, the International New York Times reported on a Reuters story. China Huarong Asset Management, one of four state-backed so-called "bad banks" formed in 1999, has been trying to raise cash since Lai Xiaomin resigned as chairman in April amid a graft probe, the sources said.

Chinese domestic bonds may once have been the world’s biggest market that no one paid attention to. No longer. Mounting defaults and steepening yields have raised doubts about the $12 trillion market’s health, just as China’s economy shows signs of faltering, The Wall Street Journal reported. All the same, foreign investors have been piling in this year. Are they headed for a rude awakening? Stress is rising, for sure: Chinese companies have defaulted on $2.9 billion worth of bonds this year, almost as much as in all of 2017, according to Wind Info data.

Analysts are taking note of the struggles in China’s banking industry, which is being battered by an official deleveraging drive, Bloomberg News reported. At least five smaller lenders have been downgraded by credit-rating companies this year, a record pace for the sector. Spikes in the volume of non-performing loans and an increase in loans overdue are among the reasons. One of the lenders -- Guizhou-based Guiyang Rural Commercial Bank Co. -- saw its bad debt balloon nearly tenfold in the space of two years, according to the assessor that slashed its rating.

China’s economic policy could be in line for a rethink, Bloomberg News reported. A slew of negative headlines from the escalating tension with the Trump administration and slowing growth to a bear market in stocks is prompting renewed focus on if and how policy makers will respond. Whether that’s a softening in Xi Jinping’s signature anti-leverage campaign or an official shift to monetary easing to match tweaks already made, upcoming meetings of the top political leadership provide an opportunity for a change of direction -- or an affirmation of the course already set.

The economy of South Korea, which is very reliant on China, may see more adverse impact than previously expected from China’s plan for deleveraging, the Bank of Korea said in a report on Sunday, Bloomberg News reported. South Korea’s gross domestic product growth could be 0.3 percentage point less than expected in 2018 and maybe 1.2 percentage point less in 2020 because of Chin’s plan to cut financial risks by deleveraging, the central bank said in its report, citing data from Oxford Economics and Fitch.

A wave of defaults is sweeping across China’s Rmb1.3tn ($190bn) peer-to-peer lending industry, causing investors to withdraw funds and platforms to collapse, the latest casualties of Beijing’s broader crackdown on debt and financial risk, the Financial Times reported.  About 150 online lending platforms have suffered “problems” since the beginning of June this year, compared with 217 such cases in all of 2017, according to Online Lending House, a research group that tracks the industry.

India needs a strategy to get the government out of banking. Non-performing loans among state-owned banks -- a legacy of India’s socialist past which account for nearly 70 percent of deposits -- have crossed 5 percent of GDP, a Bloomberg View reported. The central bank has restricted lending at 11 of them and forced one, IDBI Bank Ltd., to sell itself to the government-owned Life Insurance Corporation of India. State banks have repeatedly been a burden on the exchequer and will almost certainly continue to be so.

Like other countries, China has bureaucratic infighting. But it does better than most at keeping tussles hidden from outside view, especially under Xi Jinping, a president who brooks no dissent. So it has been highly unusual to see a spat between the central bank and finance ministry spill into the open, The Economist reported. It reveals cracks in the government’s façade of unity as a campaign to control debt exacts a toll on the economy. The disagreement started on July 13th when Xu Zhong, head of the central bank’s research department, spoke at a forum in Beijing.

IBBI Chief M.S. Sahoo on Thursday said the process to put in place a framework for cross-border insolvency cases is under way. The government is keen to introduce a globally accepted and well-recognised cross-border insolvency framework, which would also make India an attractive investment destination for foreign creditors, given the increased predictability and certainty of the insolvency process, The Hindu reported. Asked about the status of cross-border insolvency, Mr. Sahoo said, comments have been invited.. and have also been received.

Abraaj Group Ltd. is being sued by one of the founders of a Turkish dairy maker that the embattled buyout firm is trying to sell, according to people familiar with the matter. The legal action comes as liquidators of Dubai-based Abraaj seek to dispose of assets in developing nations around the world to help repay more than $1 billion in debt, Bloomberg News reported.