Shanghai police say they have found the root of rumors that sparked a home-buying frenzy in late August and led to instability in the city’s real-estate market, The Wall Street Journal China Real Time Report blog reported. It began, police said, with a woman who said she had a tip that the city government was mulling changes to home-buying rules.

More than half of Chinese infrastructure investments have “destroyed, not generated” economic value as the costs have been larger than the benefits, according to researchers at Oxford university, a finding that will fuel debate over the viability of China’s infrastructure-heavy growth model. Infrastructure investment has been a major driver of Chinese economic growth over the past 35 years as hundreds of millions of workers migrated from rural to urban areas. China has stepped up infrastructure spending this year to buffer a slowdown in manufacturing investment.

When several large state-owned companies in China unexpectedly defaulted on their debts earlier this year, the government seemed determined to send a clear and unified message: it was time to get rid of zombie companies, Reuters reported. But since then, China's signals have become increasingly contradictory and as a result bond market pricing suggests investors see the smallest chance in seven years that many firms will be allowed to go bankrupt.

Eight Chinese centrally-owned state-owned enterprises signed restructuring contracts on Tuesday, the state-run China Securities Journal reported on Wednesday, The Daily Mail reported on a Reuters story. These companies are Aviation Industry Corp of China, China National Machinery Industry Corp, China Poly Group Corp, China First Heavy Industries, China North Industries Group Corp, China South Industries Group Corp, China Reform Holdings Corp Inc, and China Nuclear Engineering Construction Corp.

China’s banks, which dialed down fundraising efforts this year even as bad debts swelled, are making up for lost time, Bloomberg News reported. Both lenders and the companies set up to acquire their delinquent assets are bolstering their finances. China Citic Bank Corp. last month announced plans to raise as much as 40 billion yuan ($6 billion), while Agricultural Bank of China Ltd., Industrial Bank Co. and China Zheshang Bank Co. are also boosting capital. China Cinda Asset Management Co. and China Huarong Asset Management Co. are poised to tap investors.

China’s banks are set to be the biggest losers in the sweeping bailouts of the country’s steel and coal industries, the Financial Times reported. Local governments hoping to save their steel mills and coal miners have announced a series of restructuring plans, enlisting the banks to take the hit by improving the terms of the loans or swapping them for bonds or equity in the struggling groups.

As bond defaults soar in China, investors and regulators are moving to introduce financial tools that have been widely used in global markets to provide protection for creditors in cases where companies can’t pay their debts, The South China Morning Post reported. The National Association of Financial Market Institutional Investors (NAFMII), a Chinese industry body under the People’s Bank of China (PBOC), has consulted major banks and brokerage firms in recent weeks about a plan to introduce credit default swaps, according to recent media reports in the mainland and Hong Kong.

China’s debt pile is huge and – more worryingly – growing fast. And credit isn’t delivering the same kind of economic boost it once did. But most debt is in local hands in a largely closed financial system, giving China’s leaders some breathing space to fix the mess. And that’s good for the global economy, Bloomberg News reported. China’s total debt is now about two and a half times the size of its economy. It takes almost a third of gross domestic product just to service it. Corporations are by far the biggest debtors, especially state-owned enterprises.

The best-performing bank in China is in a struggling city in the northeast where weeds sprout alongside the concrete skeletons of high rises in an industrial zone that mostly looks like a ghost town, Bloomberg News reported. Steel plants have laid off tens of thousands of workers. Cranes stand idle on construction sites. Wipe away a spiderweb on a dirty glass door at an empty complex with smashed windows and there’s a notice from the local government demanding rent unpaid since November 2014. Yet the Bank of Tangshan’s financial statements hardly reflect these realities.

Cracks are starting to show in China’s labor market as struggling industrial firms leave millions of workers in flux, Bloomberg News reported. While official jobless numbers haven’t budged, the underemployment rate has jumped to more than 5 percent from near zero in 2010, according to Bai Peiwei, an economics professor at Xiamen University. Bai estimates the rate may be 10 percent in industries with excess capacity, such as unprofitable steel mills and coal mines that have slashed pay, reduced shifts and required unpaid leave.