China

Industrial Bank Co. and Huaxia Bank Co. asked Baoding Tianwei Group Co., a Chinese maker of power transformers, to repay two bonds early after it became the first state-owned enterprise to default on onshore debt in April, Bloomberg News reported. Industrial Bank is seeking 793 million yuan ($125 million) in principal and interest while Huaxia Bank has asked for 248 million yuan, according to Baoding Tianwei’s statement on the Chinamoney website Monday. The lenders sent requests for the notes due in December and March to the China International Economic & Trade Arbitration Commission.

Tough medicine for China's ailing stock markets has brought stability to prices, at least for now, but it has come at a cost; equities and futures are trading so thinly that they are in danger of flat lining, Reuters reported. Intraday volumes on key onshore equity markets fell and stock futures turnover all but evaporated this week, after exchanges proposed a "circuit breaker" to limit index swings and China altered dividend taxes to favour long term investors.

It is hard to know what represents prudent diversification and what constitutes capital flight on the part of Chinese groups and wealthy travellers, the Financial Times reported in an insight. But for those who track capital outflows from China, the distinction does not much matter. In the four quarters to the end of June, such outflows, (which do not include debt repayment) have totalled more than $500bn according to data from Citigroup.

After a summer of turmoil in the stock and foreign exchange markets, China’s financial and business communities are on edge, the Financial Times reported. Capital outflows and a slowing economy are adding to the unease. The US Federal Reserve’s impending interest rate rise adds another headwind for investors and companies to contend with. The People’s Bank of China’s decision in mid-August to let the renminbi depreciate caught the market by surprise, but among the most plausible theories to explain the move is that it was designed to pre-empt the Fed’s move.

China will loan Venezuela $5bn to boost oil output, the Venezuelan president said in a televised broadcast from Beijing, in a show of continued support for the troubled Latin American economy from one of its main creditors, the Financial Times reported. China has lent $50bn to Venezuela in oil-backed loans secured under former president Hugo Chávez but has become much less enthusiastic about adding to its exposure as the Venezuelan economy has worsened. Venezuela is the eighth-largest oil supplier to China, primarily of heavy crude that trades at lower than benchmark prices.

China’s sudden decision last month to devalue its currency riled neighbors and fueled investors’ fears about a sharp slowdown in the world’s No. 2 economy. But the move has won over the International Monetary Fund and even secured restrained praise from the U.S. Treasury Department, The Wall Street Journal reported. The currency maneuver has positioned the Chinese government to press for a greater international role for the yuan during visits to a series of Group of 20 meetings starting this week and a visit to Washington later this month.

China is imposing fresh controls to prevent too much money from leaving the country, in an effort to keep badly needed funds at home to battle a deepening slowdown in the world’s No. 2 economy, The Wall Street Journal reported. The country’s central bank said Tuesday that it will make it more expensive for investors to pressure the yuan to weaken against the U.S. dollar by adding conditions to futures contracts. Some of the country’s largest lenders, including Bank of China Ltd.

China’s wobbly response to the bursting of its stock market bubble, the sudden devaluation of the renminbi and the mystery over the true health of the country’s economy continue to spook investors, large and small, the Financial Times reported. But China’s wealthiest people know exactly what to do in these bewildering times: get some of their money out. More than 60 per cent of wealthy Chinese people surveyed in July by FT Confidential, an investment research service at the FT, said they planned to increase their overseas holdings in the coming two years.

To protect jobs and plants, the Chinese government and its state-owned banks sometimes keep money-losing businesses on life support by rolling over or restructuring loans, providing fresh credit or offering other aid. While this may seem like an odd business tactic, it is part of a broader strategy to help maintain social stability, a major goal of China’s leadership. Authorities in China’s provinces and cities also back struggling factories just because they are deemed important to the local economy. Similar strategies have been tried before, with little success.

In recent days, an advice column has circulated widely on China’s most popular social media phone app. Titled “Guide on Safe Passage Through the Economic Crisis,” it is aimed at young Chinese urban professionals, the International New York Times reported. Its nuggets of wisdom include: “Work hard at your job so you are the last to be laid off” and “In an economic crisis, liquidity is the number one priority.” Zhang Yuanyuan, 31, a bank teller in Shandong Province, is among the thousands of people who have shared it online.