A surge in bankruptcy cases in Chinese courts last year is welcome progress, the Financial Times reported. The lack of creative destruction in China has been a perennial problem, exacerbating industrial overcapacity and piling mountains of bad loans on to the banking system. But the cull of zombie companies, while positive, still falls a long way short of the thorough restructuring that China’s economy needs. The zombie hunt did not aim at the big, lossmaking state-owned enterprises.

Bankruptcy cases surged in China last year, indicating growing economic stress as well as progress in the ruling Communist party’s efforts to use the country’s courts to deal with indebted “zombie” companies and reduce industrial overcapacity, the Financial Times reported. Chinese courts accepted 5,665 bankruptcy cases in 2016, an increase of 54 per cent from the year before, the country’s top court said on Friday. About 3,600 of those cases were resolved, with 85 per cent of the resolved cases resulting in liquidation.

Average wages in China’s manufacturing sector have soared above those in countries such as Brazil and Mexico and are fast catching up with Greece and Portugal after a decade of breakneck growth that has seen Chinese pay packets treble, the Financial Times reported. Across China’s labour force as a whole, hourly incomes now exceed those in every major Latin American state apart from Chile, and are at around 70 per cent of the level in weaker eurozone countries, according to data from Euromonitor International, a research group.

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.

The Chinese economy seems to have settled into a new normal of slower but still impressive growth, The Wall Street Journal reported. Underneath the apparent calm, however, trouble is brewing. Some of the problems are well known, such as burgeoning debt, the social fallout from deep industrial capacity cuts and the risk of a trade war with the U.S. But one risk has yet to be fully appreciated: financial distress. A cash crunch could paralyze pockets of the fast-growing shadow-banking sector and metastasize.

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.