China

Seventeen years ago, Zhou Xiaochuan, then president of one of China’s oldest and largest banks, wrote an essay in an economics bimonthly magazine addressing the hottest policy topic of the day: a controversial new government program that let selected state-owned companies unwind loans they couldn’t repay with massive equity transfers to banks, The Wall Street Journal reported. In the 1999 essay, Mr. Zhou, who is now China’s central bank governor, laid out a clear-eyed critique of the dangers of debt-to-equity swaps. Beijing had already got the swaps underway by the time Mr.

China is in the midst of a dizzying housing bubble. Shanghai’s average housing price is up nearly one-third from a year ago, with prices in major cities like Beijing and Guangzhou not far behind. Chinese consumers are rushing to buy homes before the government steps in with restrictions, the International New York Times reported. When rumors swept through Shanghai that the government would require homeowners to pay more in taxes and down payments to buy additional properties, many couples filed for divorce so that one partner could still be treated as an independent buyer.

Sino-Europe are going to complete AC Milan’s takeover by the 15th of November and new CEO Marco Fassone will be flying to China where he will meet owners and new potential sponsors for the new club’s course. According to Sole 24 Ore, however, new owners are not going to intervene in the club’s € 220 million debt, but American investment banking will do it instead. Goldman Sachs will reportedly manage the shareholding reorganization of Milan.

A surge in overseas lending has left Chinese policy banks highly exposed to countries at risk of default, forcing a rethink that could reshape its engagement with developing economies. A Financial Times analysis shows that six of the 10 biggest recipients of Chinese development finance between 2013 and 2015 are considered to be most at risk of default using an Organisation for Economic Co-operation and Development measure. By contrast only two of the top 10 recipients of World Bank development loans between 2011 and 2015 were in the same risk category.

A typical big company is chock-full of bosses, from the basement mail room all the way up to the executive suite. Even at the top, those in charge sometimes have to answer to big investors pushing for change, the International New York Times reported. China has said it wants to make its bloated state-owned companies more like that: Hungry, results-oriented and responsive to shareholders. But this week, China’s top leader made clear to the chiefs of the country’s biggest companies that there is only one boss who matters.

China Construction Bank Corp., the nation’s second-largest lender, said it plans to raise 24 billion yuan ($3.6 billion) with Wuhan Iron & Steel Group for a fund that will help lower the unprofitable Chinese steelmaker’s debt levels, Bloomberg News reported. The two companies have already raised 12 billion yuan in the first stage of fundraising after reaching an agreement on Aug. 18, the Beijing-based lender said in a statement on its website on Tuesday. A representative for Wuhan Steel couldn’t immediately be reached for comment.

Finance firms that help keep cash flowing to China’s towns, cities and provinces face rising risks of landmark bond defaults just as they turn to global markets for funds, Bloomberg News reported. China’s economic slowdown is weighing on revenue at regional governments, hampering their ability to support the 5.3 trillion yuan ($789 billion) of outstanding onshore notes from local-government financing vehicles, which have yet to suffer nonpayments. Such issuance fell 18 percent last quarter as regulators curbed sales, forcing some to seek funds overseas.

Dongbei Special Steel Group Co Ltd has formally entered into a bankruptcy restructuring process following a court filing by one of its creditors, official news agency Xinhua reported on Monday. Dongbei, owned by the Liaoning provincial government in the country's "rustbelt" northeast, has been at the heart of troubles in China's debt market this year, defaulting on nine separate bonds even as Beijing has vowed to crack down on "zombie" firms with perennial losses and too much debt.

Fushun Special Steel said on Friday a court is reviewing an application from creditors for a bankruptcy restructuring of parent Dongbei Special Steel Group Co Ltd., Reuters reported. Fushun Special Steel said in a statement on the Shanghai stock exchange website that its own operations and capital flows were normal. State-owned steelmaker Dongbei Special Steel, an unlisted company, owns 35.22 percent of Fushun.

China is struggling with a string of rust-belt corruption cases that reflect the government’s troubles delivering on one of its signature policies: reducing the bloat in major industries that are dragging down the economy, the Wall Street Journal reported today. In the latest case, made public by official media this week, prosecutors accused a midlevel official of siphoning at least $6.3 million in government funds meant to help laid-off workers.