China

During an interview last month at the posh Shangri-La Hotel in Hong Kong, Henry Li stepped aside four times in an hour to take calls. Creditors were frantically trying to connect with the chief financial officer of China Shanshui Cement Group Ltd., and they wanted to know one thing: Was his company about to default? "Honestly speaking, banks are very worried about us, as you can tell from the fact that I’ve received many calls,” said Li, sitting alongside Shanshui Chairman Zhang Bin as they discussed the firm’s predicament with Bloomberg on Oct. 14.

A consortium of investors in debt-laden Chinese developer Kaisa Group Holding led by Farallon Capital has drafted a proposal that would inject $650 million into the company and result in higher recovery for bondholders, documents seen by Reuters showed. Under the proposal, the consortium would inject $150 million into the company with the rest coming from existing shareholders exercising warrants to buy heavily discounted shares. That purchase would result in the consortium owning a 20 percent stake, with existing shareholders getting an additional $5 million in cash on a pro-rata basis.

The Baha Mar resort’s Chinese lender has decided to foreclose on the $3.5 billion resort in the Bahamas and has appointed a receiver to bring the delayed project to completion, roughly six weeks after it was thrown out of bankruptcy protection in the U.S. The move by the Export-Import Bank of China, which received Bahamian court approval to name Deloitte to the receiver role, comes a few weeks after some 2,000 employees in the Bahamas lost their jobs at the partially completed resort at the request of court-appointed liquidators.

China’s top leader sent the strongest signal yet that the government expects the world’s second-largest economy to shift to a slower pace, suggesting Beijing could tolerate growth as low as 6.5%, The Wall Street Journal reported. President Xi Jinping warned that China’s economy faces domestic and global uncertainties, as his government began Tuesday to reveal details of its next five-year plan via China’s official Xinhua News Agency.

Debt-laden Chinese developer Kaisa Group Holding is close to finalising a deal with its onshore creditors, a senior advisor said, days after the company said its talks with offshore creditors were also progressing, Reuters reported. Kaisa became the first Chinese property developer to default on its offshore debt payments. The company which owes almost $11 billion, of which $2.5 billion is due to overseas creditors, is in the midst of debt restructuring talks which have helped support its bonds.

He has been called China’s Carl Icahn. But the billionaire owner of one of the country’s most successful investment firms is now the latest suspect in the broadening crackdown on corruption in the financial industry, the International New York Times reported. The fund manager, Xu Xiang, nicknamed Big Xu, was arrested in dramatic Hollywood fashion, more worthy of a spy movie than a financier. As the police closed in, the highway patrol sealed the 22-mile Hangzhou Bay Bridge for more than 30 minutes and eventually apprehended Mr. Xu near the exit, according to state media.

Activity in China's manufacturing sector unexpectedly shrank for a third straight month in October, an official survey showed on Sunday, fuelling fears that the economy may be cooling further in the fourth quarter despite a raft of stimulus measures, the International New York Times reported on a Reuters story. The official Purchasing Managers' Index (PMI) was at 49.8 in October, the same pace as in previous month and lagging market expectations of 50.0. A reading over 50 points suggests an expansion in activity while one below that level points to an contraction on a monthly basis.

The wealth-management products that banks sell at branches across China are often considered as safe as deposits by customers. There are growing reasons to question that faith, Bloomberg News reported. The ability of Chinese lenders’ $2.4 trillion of WMPs to generate the returns they promise is being undermined as monetary easing has pushed corporate bond yields to a five-year low.

China’s moves to ease mortgage restrictions and cut interest rates are bearing fruit in the nation’s smaller cities, where home prices have staged a recovery. Now comes the bigger challenge: Clearing a supply glut to spur investment by developers, Bloomberg News reported. Lower borrowing costs are helping a residential market recovery spread from the economic hubs such as Shanghai and Shenzhen to smaller and less-prosperous cities. New-home prices rose in September from August in more than half of the 70 major cities monitored by the government for the first time in 17 months.

In most respects, double-digit growth is a relic of the past for China. In the third quarter the economy grew by just 6.9% year-on-year according to official data, and probably by a percentage point or two less in reality. Yet bank loans increased by 15.4% in the third quarter compared with the same period in 2014, The Economist reported. Having released a torrent of credit to buoy the economy during the financial crisis, China was supposed to have started deleveraging by now.