China

China's exports and imports fell more than expected in July in a rocky start to the third quarter, pointing to further weakness in global demand in the aftermath of Britain's decision to leave the European Union, The International New York Times reported on a Reuters story. Imports fell 12.5 percent from a year earlier, the biggest decline since February and suggesting China's domestic demand may be faltering despite a flurry of measures to stimulate economic growth. "I think (the drop in imports) is mainly from the demand side," said Ma Xiaoping, an economist at HSBC in Beijing.

A Chinese shipbuilder failed to make a bond payment due Monday, becoming the second such company to default in the onshore market this year. Wuhan Guoyu Logistics Industry Group Co., which is based in the central province of Hubei, didn’t transfer funds for interest and principal payment to the Shanghai Clearing House before the due time, according to a statement Monday. The firm issued the 400 million yuan ($60 million) of one-year bonds at 7 percent in 2015.

China’s banking regulator has warned companies not to use the word “bank” in their names following a series of scandals and multibillion-dollar investment scams, the Financial Times reported. Several outfits posing as accredited financial institutions have been exposed by the regulator in the past year, among them a China Construction Bank operating out of a convenience store in a village in Shandong province. Banks and other deposit-taking institutions in China need approval from the State Council to use the label “bank” or perform most banking services.

China is edging closer to launching its own version of a popular hedging tool that protects investors in case of defaults, as the world’s No. 2 economy struggles to cope with slowing growth and record numbers of companies not paying back debt, The Wall Street Journal reported. The National Association of Financial Market Institutional Investors, an industry body backed by China’s central bank, has consulted major banks and brokerage firms in recent weeks about the planned rollout of credit-default swaps, three people familiar with the situation said.

The faith that international investors have put in some credit sweeteners on Chinese debt is being tested with the latest default from one of the nation’s builders. China City Construction International Co., whose recent shareholder change triggered early redemption of its debt, failed to make full payment due June 20 on its 5.35 percent 2.5 billion yuan ($377 million) Dim Sum notes with an original 2017 maturity, people familiar with the matter said last month. Its parent China City Construction Holding Group Co.

Never before have China’s companies had so much cash and so little to spend it on. With investment opportunities sparse amid the country’s weakest economic expansion in a quarter century, Chinese firms reported an 18 percent jump in cash holdings during their latest quarter, the biggest increase in six years. The $1.2 trillion stockpile -- which excludes banks and brokerages -- grew at a faster pace than in the U.S., Europe and Japan, according to data compiled by Bloomberg.

Two key gauges of Chinese factory output in July showed conflicting results, with one that focuses on larger state-owned companies flagging and the other, on smaller private companies, soaring, The Wall Street Journal reported. The National Bureau of Statistics said Monday that the official manufacturing purchasing managers’ index dipped into negative territory for the first time in five months, to 49.9 last month from 50.0 in June. It fell short of many economists’ expectations.

China’s foreign exchange regulators are struggling to stem the flow of personal wealth spilling offshore via Hong Kong’s insurance industry, the latest results from the world’s second-largest insurer suggest, the Financial Times reported. On Thursday AIA Group said that the value of new business in the territory increased by 60 per cent to $537m in the first six months of the year, noting a “substantial uplift in new business from mainland Chinese customers”.

A series of bond defaults in north-east China is exposing creditors’ frustration at the lack of a transparent process for resolving bad debt as cash-strapped local governments step back increasingly from taxpayer bailouts, the Financial Times reported. President Xi Jinping’s push for “supply-side reform” is centred on cutting excess capacity and paring back credit to so-called zombie companies, many of them state-owned. That is setting up conflicts between creditors and local governments that rely on state factories for employment and tax revenue.

A very local problem in China is being exported at an alarming rate, according to a Bloomberg commentary yesterday. Debt from special-purpose vehicles linked to municipal and provincial governments -- leverage that central authorities are trying to extinguish -- is becoming more common in overseas markets. What's worse, lately it's been the weakest cities and provinces panhandling to international investors, according to the commentary.