China

At dusk under a smoggy sky, in the heart of north-east China’s rust belt, workers in beige uniforms file out of Shenyang Machine Tool, a lossmaking state-owned enterprise that is a pillar of the regional economy, the Financial Times reported. It looks like the end of any day in the company’s 35-year history, but workers know the factory’s best days are behind it.

South Africa is getting down to the business of fixing its debt-ridden state power utility. Eskom Holdings SOC Ltd. had 399 billion rand ($30 billion) of debt at the end of March, according to Bloomberg data, and has been flagged by ratings companies as a key risk to South Africa’s economy, Bloomberg News reported. The utility has been mired in a series of scandals, struggled to raise funds and was forced to implement rolling blackouts last month after wage talks with unions broke down.

Chinese financial markets are rediscovering an appetite for risk not seen in months, taking cues from the government’s biggest push yet to invigorate this year’s slowing economy, Bloomberg News reported. The CSI 300 Index of mainland stocks climbed 1.6 percent Tuesday, capping its biggest three-day gain since mid-August 2016, when economic indicators vindicated China’s moves to stabilize a slowdown back then. While there’s no guarantee of success this time, with the X-factor of a trade dispute with the U.S. at play, traders are betting big.

Chinese independent refiner Shandong Haiyou Petrochemical Group and a chemical trader have filed for joint bankruptcy, according to a court filing, the latest sign of deepening pain for the sector amid high oil prices and greater regulatory scrutiny, Reuters reported.

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.

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.

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.