Almost a year after China rolled out steps to rein in soaring corporate leverage, concerns are rising that undeserving companies are benefiting while households are getting saddled with risks, Bloomberg News reported. China unveiled guidelines for debt-to-equity swaps in October, part of measures to trim the world’s biggest corporate debt loads. The idea was that healthy firms would use the program to cut interest-bearing borrowings, while bloated companies would be shunned.

China's moves to crack down on illicit banking activities have achieved initial targets and 20 sets of new regulations to increase supervision will be issued this year, the chief of the banking regulator's Prudential Regulation Bureau said on Friday, the International New York Times reported on a Reuters story. The new regulations will cover policy banks, online lending, interest rate risks and asset management firms, Xiao Yuanqi told a briefing.

Growth in China’s broad money supply slipped to a fresh record low, signaling authorities aren’t letting up in their drive to curb excess borrowing and safeguard the financial system, Bloomberg News reported. Authorities pushing to cut excess leverage have squeezed the massive shadow bank sector, which shrank for the first time in nine months. Yet with aggregate financing remaining robust and bond issuance rebounding, the central bank is still providing ample support for businesses to avoid derailing growth ahead of a key Communist Party congress this fall.

China had unexpected buoyancy in its economy to thank for an easing off in corporate defaults in the first half, Bloomberg News reported. But as growth shows signs of pulling back, the question is: will it last? Despite alarm over the risks posed by China’s daunting debt pile ticking up in the first six months of the year, the country actually saw a drop in corporate distress, with 0.27 percent of issuers defaulting, versus 0.55 percent in all of 2016, according to China Lianhe Credit Rating Co. Goldman Sachs Group Inc., too, saw Chinese company leverage drop in the first half.

For China’s ruling Communist party, its foreign exchange reserves are a symbol of national strength and are a crucial buffer against economic shocks. So the alarming announcement that forex reserves had fallen below $3tn in January marked a shift in political faultlines that is only being felt this summer, the Financial Times reported. As more than $1tn left the country over the previous 18 months amid a flurry of large overseas acquisitions, a sense of crisis grew within the party. Technocrats in Beijing had already prepared the ground to take action.

Chinese courts handled more than 4,700 bankruptcy cases in the first seven months of 2017, up "steadily" on the same period of 2016 as Beijing stepped up its campaign against 'zombie firms', a senior official with the judiciary said on Thursday. "The difficulties of launching a bankruptcy case have been effectively eased," He Xiaorong, a senior director at China's Supreme People's Court, told a news briefing.

Chinese commodities trader COFCO has asked to participate in an auction in Brazil where a sugar mill owned by India's Shree Renuka Sugars Ltd will be sold as part of an in-court debt restructuring, according to court documents seen by Reuters on Tuesday. COFCO already owns four sugar and ethanol plants in Brazil capable of processing a combined 15 million tonnes of cane per year. The company looked at other potential targets last year, but said prices were too high, Reuters reported.

Chinese companies battling to cope with the government-induced tightening in funding markets are bracing themselves for the next shoe to fall: a wave of early bond redemptions. The nation’s businesses sold about 65 percent of all corporate bonds with put options worldwide, at 3.9 trillion yuan ($580 billion), Bloomberg News reported. Creditors holding some 2 trillion yuan of mainland notes will be able to exercise those options in the next two years, forcing issuers to either increase interest payments or redeem the debt early.

In China, taxi rides aren’t just a form of transportation any more. They’ve also become useful for bond buyers doing due diligence. Dining out at restaurants is also helpful. It’s all part of a boom in field trips by market participants coming to grips with a new reality in China: the potential for bond defaults. After decades when authorities effectively provided blanket assistance to keep troubled companies from going under, the Communist leadership’s focus on shuttering unproductive assets has upended the market, Bloomberg News reported.

Doomsayers have plenty to work with in China. The country’s rapid buildup of debt -- reaching approximately 260 percent of GDP, from 160 percent less than a decade ago -- seems almost guaranteed to herald a financial crash or at least a major correction, quite likely followed by years of stagnation, a Bloomberg View reported. If the world’s second-biggest economy ultimately defies the doubters, though, this may well be seen as the year things turned around. Consider this: China is on track to see its best nominal GDP performance since 2011, even as credit growth remains moderate.