China

China had one of the best-performing stock markets in the world in 2015. Yet it was a dismal year for Chinese markets, The Wall Street Journal reported. Chinese stocks suffered an unprecedented summer crash that wiped out 43%, or $5 trillion, of their value at one point. That was followed by an abrupt 2% currency devaluation in August that sent shock waves through global markets. Bold reforms seen as crucial to Beijing’s efforts to turn around a slowing economy, such as a modern stock-listing system and lighter capital controls, stalled as the market turmoil unnerved authorities.

The People’s Bank of China has suspended at least two foreign banks from conducting some cross-border yuan business until late March, Bloomberg News reported yesterday. The clampdown comes as the growing offshore-onshore spread makes it profitable for those who skirt capital controls to buy the currency at a discount in Hong Kong and sell it in Shanghai.

China’s insurance regulators are raising alarms about risks in the industry, warning that aggressive stock buying by insurers and sales of high-return products could damage the country’s financial system, the Wall Street Journal reported today. The China Insurance Regulatory Commission has issued at least six statements on risk control since late November, including a demand for better disclosure and limits on the size of high-return products.

Chinese corporate defaults will likely spread next year as borrowing costs climb, financial companies surveyed by Bloomberg said yesterday. All 22 bond traders, analysts and others surveyed forecast China’s corporate default rate will rise in 2016, while over 70 percent expect the extra yield on corporate notes to increase. The premium on five-year AA rated company securities over government notes has risen to 173 basis points after plunging to an eight-year low of 169.2 basis points last month.

China Great Wall Asset Management Corp. said today that two state entities will become investors and that it will seek more investors to pave the way for an eventual initial public offering, the Wall Street Journal reported today. The asset-management company--one of four Chinese financial institutions known as “bad banks” for buying up sour loans--said that China’s National Social Security Fund and China Life Insurance will buy unspecified stakes in the firm. It didn’t disclose details.

China’s central bank said that it would extend the yuan’s trading hours in the mainland market starting next month, in a much-anticipated move aimed at increasing the Chinese currency’s global appeal, the Wall Street Journal reported today. The People’s Bank of China said that beginning on Jan. 4, the hours for buying and selling the yuan on the mainland will be extended to 11:30 p.m. local time, from the current 4:30 p.m.

Shades of the 1990s are haunting China’s rust-belt cities as strapped state-owned employers look at cutting jobs, with beleaguered Wuhan Iron & Steel Group the latest company said to be laying off thousands of workers, the Financial Times reported. The dismantling of market pricing reforms and the “iron rice bowl” system of life-long jobs in the 1990s eliminated thousands of state-owned small or medium-sized enterprises, which specialised in everything from industrial boilers to wedding photographs.

The Hong Kong-based civic group China Labour Bulletin says strikes and labor protests nationwide nearly doubled in the first 11 months of 2015 to 2,354 from 1,207 in the same 2014 period. China’s labor ministry says 1.56 million labor-dispute cases were accepted for arbitration and mediation in 2014, up from 1.5 million in 2013, The Wall Street Journal reported. Behind the strife is an economy decelerating faster than the government expected, sparking layoffs and factory closings.

Kaisa Group Holdings Ltd.’s debt restructuring will probably succeed after gaining local support as both onshore and offshore creditors met over the weekend to align their interests, advisers said, Bloomberg reported. The Shenzhen-based developer is believed to be getting backing from a committee of onshore creditors, the local government and the China Banking Regulatory Commission, according to an e-mailed statement from Kirkland & Ellis and Moelis & Co., who are advising some offshore bondholders. There’s “high likelihood” that the onshore restructuring can succeed, they said.

China Shanshui Cement warned investors it will default on more than $300 million of onshore debt payments due on Thursday and will seek to appoint liquidators, a sign Chinese authorities are more willing to let weak firms fail, Reuters reported. The privately controlled company, with a market capitalisation of $2.7 billion, has felt the squeeze from falling demand in a sector struggling with overcapacity as the giant economy shifts gears. It reported a 31 percent decline in revenues and a net loss for the first half of the year.