China

Top Chinese banks are rushing to ensure they can maintain business ties with Russian clients without running afoul of a barrage of Western sanctions, people with knowledge of the matter told Reuters. Western nations are tightening an economic noose around Russia following its invasion of Ukraine, shutting its banks from the SWIFT global financial network and pushing global firms to dump billions in investment.

The People’s Bank of China said it expects the number of high-risk banks to continue to decline in coming years, vowing to persist with its campaign to curb financial risks in the economy, Bloomberg News reported. By 2025, the number of lenders in the “high-risk” category in the PBOC’s quarterly reviews will likely drop below 200 from 316 in the fourth quarter of 2021, the central bank said in a statement Thursday. At the peak in the third quarter of 2019, there were 649 banks listed in the category, according to the statement.

After more than 10 dollar-debt defaults by property developers over the past year, many investors have come to the conclusion that trust is broken in the $200 billion market for high-yield bonds of Chinese companies, the Wall Street Journal reported. Since last summer, when the financial troubles of China Evergrande Group sparked a selloff in the giant property company’s bonds and those of its peers, the market has remained deeply distressed, with no end in sight to the malaise.

China’s strategic partnership with Russia has the potential to be a lifeline for a Russian economy foundering under crippling Western sanctions, but Beijing appears to be holding back over practical constraints and fears of secondary sanctions on Chinese institutions, the Washington Post reported.

The insolvency case of Guo Wengui, the exiled Chinese businessman, got off to raucous start Tuesday when a longstanding creditor called the move “astonishing” and signaled it would wage an aggressive fight in bankruptcy court, Bloomberg News reported. Guo, a former partner of Trump political strategist Steve Bannon, filed for bankruptcy last month after moving a yacht from New York waters, a shift that would keep it out of the reach of creditors, and then facing a $134 million penalty for taking that step.

A widely-anticipated push by China’s government to boost construction in order to stabilize growth in the world’s second-largest economy has yet to materialize, a blow to hopes that Chinese stimulus would lift global growth early on this year, Bloomberg News reported. The Communist Party has made its stimulus goals clear in recent months, pledging to “front-load” pro-growth policies in 2022, pushing early sales of bonds to fund investment and easing curbs on financing for the property sector.

China’s top disciplinary watchdog sharply criticized more than two dozen financial regulators, state banks, insurers and bad debt managers following months of investigations, Bloomberg News reported. The financial agencies had common problems in meeting the objectives of the Communist Party’s leadership, including gaps in their work to implement the Party’s major strategy, insufficient awareness and mechanisms to prevent financial risks, and slow progress in making financial reforms, the Central Commission for Discipline Inspection said in a statement Thursday.

Three months ago, Chinese authorities saved the country’s largest manager of distressed debt from a potentially disastrous collapse. Now, they’re turning China Huarong Asset Management Co. and its peers into a key line of defense for the $54 trillion financial system as defaults in the property sector soar, Bloomberg News reported.

Money raised by newly-launched private funds in China plunged 44% in January from a month earlier, latest official data showed, adding to evidence of rapidly-shrinking risk appetite amid a slowing economy and rising geopolitical tensions, Reuters reported. The disclosure by the Asset Management Association of China (AMAC) mirrors a slump in fundraising by Chinese mutual funds, and comes as a growing number of money managers announce fund launch failures, or extend subscription periods.

Two of China’s largest and most prosperous cities have cut interest rates for prospective home buyers, joining an effort to prop up a housing sector whose weakness could threaten the broader economy, the Wall Street Journal reported. Six of China’s largest state-owned banks, including Bank of China and Industrial and Commercial Bank of China, cut mortgage rates for home buyers in the southern city of Guangzhou by 0.2 percentage point on Monday, according to state-run broadcaster China Central Television.