While China’s state-owned banks plot debt-for-equity swaps to cut bad loans, one struggling peer-to-peer lender has brewed up a more novel plan: repaying its investors in baijiu, the popular Chinese liquor, the Financial Times reported. Chinatou.com said last week that it was no longer able to return cash to investors following the arrest of its chairman. Instead, it pledged to pay them in baijiu produced by a connected company “to minimise the loss to investors”.

Consumer inflation in China eased in May for the first time in seven months as food prices fell, giving policy makers more room to ease monetary policy, The Wall Street Journal reported. The consumer-price index rose 2.0% in May from a year earlier, compared with a 2.3% increase in April, the National Bureau of Statistics said Thursday. The rise in the key inflation gauge undershot a median 2.2% gain economists had expected. “This gives China a lot more space to keep policy settings pretty loose,” said IG Markets analyst Angus Nicholson.

China's manufacturing activity showed signs of steadying in May but remained weak amid soft demand at home and abroad, suggesting the world's second-largest economy is still struggling to regain traction, the International New York Times reported. A rebound in March had raised hopes that China's economy was reviving, breathing life into global financial and commodity markets, but analysts said the soggy activity readings and weak April data suggest no quick recovery is in sight.

An audit of a key energy group sold by troubled state investment fund 1Malaysia Development Bhd. to a Chinese state-owned nuclear-power company flagged deep uncertainty over the company’s viability. Notes from auditor Deloitte in the 140-page financial accounts of Edra Global Energy Bhd.

A four-month rally in offshore yuan bonds has helped issuance almost double this quarter. Further gains may depend on whether China can limit currency losses and defaults, Bloomberg News reported. Offerings of yuan debt outside China jumped to 23.8 billion yuan ($3.6 billion), from 12.9 billion yuan in the first quarter that was the lowest since 2013, data compiled by Bloomberg show. The yield premium for the notes versus onshore peers has narrowed as the yuan rallied in Hong Kong to erase this year’s declines.

Kaisa Group, the Shenzhen-based property developer which defaulted on its US dollar-denominated bonds, has reached a milestone in its yearlong debt restructuring negotiations after a plan was formally approved by bondholders, the South China Morning Post reported. In a filing to the Hong Kong stock exchange on Sunday, the company said its offshore debt restructuring plan was “duly passed with the approval of the requisite majority of the Scheme Creditors,” at scheme meetings held by courts in Hong Kong and the Cayman Islands on May 20.

Beijing has stepped up its battle against bad debt in China’s banking system, with a state-led debt-for-equity scheme surging in value by about $100bn in the past two months alone, the Financial Times reported. The government-led programme, which forces banks to write off bad debt in exchange for equity in ailing companies, soared in value to hit more than $220bn by the end of April, up from about $120bn at the start of March, according to data from Wind Information.

China is joining an international effort to tackle tax evasion, with plans to require multinationals to disclose more detailed information on their overseas affiliates, according to taxation consultants who advised the government on the new rules, The Wall Street Journal reported.

Xi Jinping has called for the Communist Party to “resolutely push forward supply-side structural reform,” the People’s Daily reported Monday. Last week the Party mouthpiece carried two manifestos for reform, an interview with an anonymous “authoritative person” and the transcript of a speech by President Xi. The paradox of the Xi agenda is that he wants to use China’s Leninist system of political control to drive more free-market reform. Mr.

China’s central bank is investigating the accuracy of non-performing loans (NPLs) data at banks, people with direct knowledge of the matter told Reuters on Monday. The development underlines policymakers’ concerns about rising debt in the country. Specifically, the central bank’s financial stability bureau is investigating whether any NPLs have been miscategorised as normal loans or special mention loans, referring to debt at risk of default, according to two sources who saw a central bank notice on the issue.