China’s domestic investors are more bearish than their overseas counterparts because confusing policy signals have convinced them the government is favoring state enterprises over private companies, Bloomberg News reported. That’s according to a Citigroup Inc. report from Oct. 31 which says entrepreneurs see government policies "turning left" in favor of state enterprises even as officials profess to "turn right" in support of private companies and further reform and opening up.

China’s HNA Group is looking to sell one of its prized regional airlines to a state-owned competitor, as debt woes threaten the core operations of the indebted airline-to-finance conglomerate, the Financial Times reported. The sale would mark the first formal divestment of a core domestic aviation business, a step HNA executives had vowed the group would not take but highlights the challenge of handling debts of at least $78bn accumulated during its rapid expansion.

It’s never been easy to figure out where China’s government ends and the private sector begins, but the dividing line is getting increasingly blurry as the nation’s stock market sinks, Bloomberg News reported. At least 47 non-state companies in China have disclosed plans to sell stakes to government-backed investors in 2018, company filings compiled by Bloomberg show. The pace of such deals accelerated in recent months as the country’s $3.2 trillion equity rout squeezed company founders who pledged their stakes as collateral for loans.

Chinese equities have already lost $3 trillion in market value since January, and hopes for better days ahead are fading, Bloomberg News reported. Anyone counting on a breather in this year’s final stretch got slapped with another 7.9 percent drop for the Shanghai Composite Index so far in October. That sets the gauge up for one of its worst annual performances ever, behind a 65 percent meltdown at the height of the global financial crisis in 2008, and nearing the 22 percent slumps seen in 2011 and 1994. China ranks among the world’s worst places to own shares in 2018.

China’s economic growth continued to slow in October, a period in which the trade conflict with the U.S. has intensified and policy makers have stepped up support for businesses, Bloomberg News reported. That’s the signal from a Bloomberg Economics gauge aggregating the earliest-available indicators on business conditions and market sentiment. The government effort to stabilize the mood among executives and investors hasn’t been effective yet.

China’s brokers and banks account for more than half the exposure to loans backed by company shares, a key source of risk as the country’s stock market keeps sliding, Bloomberg News reported. About 4.45 trillion yuan ($640 billion) of shares were pledged as collateral in China’s $5.4 trillion equity market as of Oct. 18, according to Chengdu-based research firm PY Standard. Banks and securities firms have extended more than half of that debt. If stock values continue falling, lenders may be forced to offload more shares, perpetuating a vicious spiral.

The funding squeeze for China’s private enterprise is expected to persist, despite recent measures aimed at easing financing difficulties, adding further pressure on the beleaguered stock market, Bloomberg News reported. Non-state companies have borne the burden of the government’s two-year deleveraging campaign, as the closing down of funding channels boosted the cost of borrowing and sent defaults to a record high.

Corporate debt investors navigating an expanding minefield of bond delinquencies in China are reaching for a hedging tool similar to credit-default swaps that was last used more than two years ago, Bloomberg News reported. Since September, China Bond Insurance Co. and Bank of Hangzhou Co. have sold four instruments called credit risk mitigation warrants, which insure creditors against defaults of the underlying debt. These risk hedging instruments are set to become increasingly popular as bond failures pile up, according to Golden Credit Rating International Co.

Beijing is trying to kick its habit of using big-ticket infrastructure spending to fuel the economy, a turning point from a growth model that has left many Chinese cities adorned with empty high-rises and underused highways, The Wall Street Journal reported. China bolstered economic growth for decades by pouring trillions of dollars into roads, factories, railroads and more, and doubled down to protect the economy from the global financial crisis of the last decade. Now the torrent has subsided as debt soared and needless projects blossomed.

China’s gummed-up credit system is threatening economic growth and officials may have little choice but to let unregulated lenders step in, the New York Times DealBook blog reported. The nation’s economy is not in desperate straits yet, but confidence appears shaken. The economy expanded 6.5 percent in the third quarter of 2018, missing expectations.