China

China’s financial regulators are working together to draft sweeping new rules for the country’s rapidly-expanding asset-management products that aim to make it clear there’s no government guarantees on such investments, according to people familiar with the matter. The draft rules would apply to products issued by banks, insurers, brokerages and other financial institutions, said the people, who asked not to be identified because the discussions are private, Bloomberg News reported. The rules would be phased in after existing products mature, and would only apply to new issues, they added.

Another January, another credit blowout. But the month’s record lending activity signals mounting pressure on corporate China to roll over its debt as much as it does confidence in the economy, the Financial Times reported. The People’s Bank of China is now tightening monetary policy at the margins but is constrained in how far it can go because of the mounting pressures to service outstanding, and growing, debt obligations.

Nowhere are China’s rusted-out industries worse than in Liaoning, a province that’s slumped into outright recession and where officials have admitted to years of inflating fiscal revenue data, Bloomberg News reported. Liaoning is also a showcase for how long a road China faces to create a world-class bond market. For all its problems, the district pays little more than its peers to borrow. On the corporate side, authorities’ reluctance to let more insolvent enterprises go under means a limited role for the market, with financiers willing to restructure their debts on the sidelines.

A year ago, Ningbo Joyson Electronic Corp. would have been an unlikely name on a shortlist of candidates to rescue Takata Corp., the Japanese air-bag maker that’s behind the biggest safety recall in automotive history. The Chinese components supplier, founded by a former TRW Automotive Inc. executive, made less than a quarter of Takata’s annual revenue, employed a workforce that’s less than half the size of its peer, and was about 70 years younger, Bloomberg News reported.

A debt default is generally not cause for celebration. Not defaulting, by contrast, should be a good thing. But in China, a lack of defaults has said more about inadequate processes for dealing with failing companies than it does about their financial health — not to mention a lack of political will to allow companies to fail. That is slowly changing. Lately, defaults have been rising as the government tries to restructure ailing state-owned enterprises, the Financial Times reported.

A Chinese phone maker’s failure to repay around $166 million in bonds has rippled through the world’s largest internet investment marketplace, hitting investors who hadn’t even bought the securities, The Wall Street Journal reported. The default, by phone maker Cosun Group, is one of the most high-profile failures to hit China’s sprawling network of Internet-based financial firms. It is an embarrassment to Alibaba Group Holding Ltd.

Drowning in debt, metals trader Sinosteel Corp. got an unprecedented lifeline last month from the Chinese government " a multibillion-dollar debt-for-equity rescue that could be the first of many for struggling state-owned companies, The New Zealand Herald reported on an AP story. China's economy is still growing relatively quickly, but a prolonged slowdown is raising fears that companies in many industries have borrowed and invested too much, too fast, posing a serious risk for the world's second-largest economy.

Forged seals, fake letters, and counterfeit documents. They’re all part of China’s recent spate of fraud coming to light in the country’s $3 trillion corporate debt market amid a rout that has analysts predicting a record number of defaults in 2017, Bloomberg News reported. As it becomes harder for Chinese companies to issue new notes to repay maturing debt, expect more scandals to come -- and to worsen the bond market’s already-precipitous downturn.

The monetary easing and strong property market that buoyed China’s economic growth last year are petering out, leaving policy makers with fewer tools to keep the economy humming steadily in an important political year, The Wall Street Journal reported. Pushed ahead by a torrent of credit and fiscal spending, the world’s second-largest economy clocked 6.7% growth for 2016, according to government data released Friday.

The omens for the Chinese yuan seemed bad heading into 2017, The Economist reported. The capital account looked as porous as ever, making a mockery of the government’s attempts to fix the leaks. The new year, when residents received fresh allowances for buying foreign currency, was due to bring even more pressure. Analysts braced for a stampede for the exits from China. The yuan had fallen sharply at the beginning of 2016, catching them by surprise. This time, they were ready. Instead, the yuan began the year as one of the world’s star performers.