Asia Pacific

China is to scrap bank lending caps in a bid to boost its slowing economy with an injection of credit – further liberalising the once tightly controlled sector, the Financial Times reported. On Wednesday, China’s State Council issued a draft proposal to relax the country’s long-held maximum loan-to-deposit ratio of 75 per cent. This follows April’s launch of a long-awaited deposit insurance system – a crucial step towards deregulating domestic interest rates, and promoting market-based capital allocation.

Businesses avoid paying $200 billion annually in taxes by channeling their overseas’ investments through offshore financial hubs, a United Nations agency said Wednesday, The Wall Street Journal reported. The estimate by the United Nations Conference on Trade and Development is one of the first attempts by an international governmental organization to put a figure on tax avoidance by companies that record their profits in countries with low tax rates, regardless of where those profits are actually earned.

China is bailing out the nation’s heavily indebted local governments, relying on trusted methods to keep its financial system stable despite promises to allow market forces to play a greater role, The Wall Street Journal reported. Beijing is permitting provinces to issue at least 2.6 trillion yuan ($419 billion) in bonds in 2015, the first local government issuances in more than 20 years, to stave off a debt crunch. Local administrations have accumulated some 18 trillion yuan, equivalent to a third of China’s economy, in bank loans and bonds to fund risky land and property deals.

Welcome to what is likely India’s largest ghost city, which extends across five expansive parcels of land along the highway adjacent to the racetrack. What was meant to be the crowning achievement of Jaypee Group and Jay Prakash Gaur, its 85-year-old patriarch, has become a monument instead to unrealistic aspirations and poor execution on the one hand and a shortfall in growth, the high cost of capital and an uncertain political landscape on the other, the Financial Times reported. The scale of Jaypee’s ghost city rivals that of some of China’s famous unoccupied cities.

Airbus said on Thursday it was studying two proposals to revive Skymark and would favour any plan that both gives the bankrupt Japanese airline a future and takes account of the planemaker's interests, Reuters reported. Alongside aircraft leasing firm Intrepid Aviation Ltd, Airbus is one of the biggest creditors to Skymark, which ran into financial trouble after embarking on an ambitious expansion that included buying A380 superjumbos.

China has given its fifth-largest bank the green light to pursue a market-based reform plan as Beijing seeks to improve efficiency at state-owned companies and counteract a far-reaching economic slowdown, the Financial Times reported. But privatisation will play only a limited role in the shake-up, the latest sign that the Communist party has no intention of relinquishing control of “strategic sectors” such as finance, energy and telecommunications.

Prime Minister Shinzo Abe is expected to unveil a plan to balance Japan’s budget in five years, a move that underscores Tokyo’s resolve to improve its deficit-ridden finances even as it continues to pursue costly economic-stimulus programs, The Wall Street Journal reported. In a draft plan to be released early next week, Mr.

A nasty consumer debt hangover awaits Thailand, as recently highlighted by EM Squared. Over the past decade, Thais have binged on auto financing and unsecured loans, to the extent that nominal household debt doubled between 2008 and 2014, and debt has reached 80 per cent of GDP*. Consumption growth has stalled, and neither consumers nor the country’s banks can stomach much more. Yet for many in Thailand, the situation is even more precarious than official figures suggest.

The Chinese government risks “real damage” to the economy if it does not hasten reform of China’s state-owned enterprises and overhaul a debt-fuelled growth model, Hank Paulson has warned, the Financial Times reported. For more than two decades the former US Treasury secretary and Goldman Sachs chief has worked closely with pivotal Chinese political figures such as Wang Qishan, currently head of the Chinese Communist party’s anti-graft bureau, and visits Beijing frequently.

Renhe Commercial appears to have a well-fortified business model: It builds air raid shelters across China for the government, outfitting them as underground shopping malls for use during peacetime, the International New York Times reported. But even that strategy has not been enough to protect the company from the fallout from China’s property market slump. Like many Chinese developers, Renhe is struggling with financial losses and debt, and it has been looking for other sources of income.