China

A profitable Chinese duck processing company has defaulted on its debts after banks refused to roll over its loans — in a sign of lenders’ wariness over refinancings as China’s economy slows, the Financial Times reported. Until recently, Chinese banks have been reluctant to write off big debts, preferring to keep businesses alive by rolling over their loans. But privately owned Zhongao has cited banks’ tighter lending policies as a reason why it lacked the funds to repay Rmb282m ($45m) in principal and interest despite turning a profit last year.

Corporate insolvency is expected to rise this year in the mainland and Hong Kong, with an increasing number of companies struggling to protect margins from late payments by customers, the South China Morning Post reported. Even as the economy continues to grow at a relatively good pace, mainland firms are grappling with a state-driven shift in economic structure. This would inevitably lead to shrinking business opportunities in sectors such as construction, cement and steel, pushing up defaults in these areas, said Dutch trade credit insurer Atradius.

The rising number of tips from the Chinese public alleging official malfeasance highlights the popularity of the country’s anticorruption campaign, even as the leadership may be shifting gears on the crackdown, The Wall Street Journal reported. Almost daily, the Communist Party’s antigraft body publishes data that show the number of officials investigated and punished is rising, including the detention of 19 top executives from state-run companies between March and April.

Kaisa Group, the troubled Chinese property developer, needs another lifeline, the International New York Times DealBook blog reported. On Thursday, the only serious offer for the company evaporated, as Sunac China Holdings abandoned its proposed $1.2 billion takeover of Kaisa. Sunac agreed in February to pay about $580 million for a 49.3 percent stake in Kaisa, with plans to pay far more for a controlling stake. The caveat was that Kaisa had to restructure its finances with creditors and bondholders, something it has struggled to complete.

Last month more than 30 provincial taxi drivers drank poison and collapsed together on the busiest shopping street in Beijing in a dramatic protest against economic and working conditions in their home town, the Financial Times reported. The drivers, who the police say all survived, were from Suifenhe, a city on the Russian border in the northeastern province of Heilongjiang.

As China's economy slows and Beijing becomes more relaxed about letting its companies fail, a rising number of foreign bondholders risk being caught up in the country's unpredictable court system, Reuters reported. Last month, solar producer Baoding Tianwei Baobian Electric became China's first ever state-owned company to default on a bond coupon payment, showing Beijing's increasing willingness to let companies go bust in a bid to reform its corporate market. Also in April, Kaisa Group became the first Chinese property developer to fail to pay a coupon on its U.S.

The Chinese economy continued to slow in April, prompting predictions of more fiscal and monetary stimulus from Beijing, much of which is likely to end up in the booming domestic stock market, the Financial Times reported. Fixed asset investment, a key driver of the economy, expanded by 12 per cent in the first four months of the year from a year earlier, the slowest pace since 2000 and down from 13.5 per cent in the first quarter.

Having delivered an interest-rate cut to help big state-owned companies and local governments cope with debilitating debt, China’s central bank is grappling with another thorny task: how to steer credit to the private businesses Beijing deems crucial to growth, The Wall Street Journal reported. The quarter-percentage-point reduction in benchmark lending and deposit rates on Sunday was primarily aimed at addressing debt-repayment problems that are increasingly weighing on the Chinese economy.

China cut interest rates for the third time in six months amid a worse-than-expected economic slowdown, as authorities scramble to ease the heavy debt burdens of companies and governments. The People’s Bank of China said Sunday it would shave a quarter of a percentage point off benchmark lending and deposit rates, effective Monday, The Wall Street Journal reported. The move comes as senior Chinese officials are growing more fearful that the mountain of debt from the rapid expansion of credit over the past few years is weighing on efforts to pick up the world’s second-largest economy.

Anbang Insurance Group of China is in talks to buy the large real-estate arm of the failed German lender Hypo Real Estate AG, in a potential billion-euro deal that would expand a global shopping spree by the Beijing-based firm, according to people familiar with the matter, The Wall Street Journal reported. State-owned bank Hypo Real Estate, based in Munich, has said it is working to sell its real-estate lending division, Deutsche Pfandbriefbank AG, known as PBB, through either an initial public offering or an outright sale.