China

Chinese banks have extended $16 billion in credit lines to shore up one of the country’s largest and most heavily indebted home builders, as pressure mounts on developers short of cash in a slumping property market, the International New York Times DealBook blog reported. The move by a group of mainly state-run banks to bolster the builder, Evergrande Real Estate Group, which is controlled by the colorful billionaire Hui Ka Yan, is the latest sign of tumult in China’s sprawling housing sector.

China is signaling more measures are in the works to regain economic momentum and overcome weak demand from businesses and consumers, The Wall Street Journal reported. Policies unveiled at the annual session of China’s legislature this month called for maintaining a moderately high rate of growth—7%—and outlined further deficit spending to support the goal.

Ever since China’s gargantuan stimulus of 2009, which was unleashed to repel the global financial crisis, people have worried about how the debts incurred would be repaid. This week the finance ministry provided a partial answer, in the form of a scheme to restructure the liabilities of local governments, the most indebted of China’s public institutions, The Economist reported. Local governments will be allowed to swap 1 trillion yuan ($160 billion) of their existing high-interest debts for lower-cost bonds.

In a world convulsed by the rising US dollar, the renminbi looks like a port in the storm, the Financial Times reported. The Chinese currency has slipped just under 1 per cent against the dollar this year, a mere rounding error compared with the Brazilian real’s 14 per cent tumble and the euro’s 12 per cent slide. But for a currency long seen as lacking a reverse gear, the recent drop to a 28-month low is nonetheless gaining attention, with some predicting far more severe problems down the road.

Germany-listed Chinese shoemaker Ultrasonic AG said on Tuesday that negotiations with its lending banks have failed and that in consequence, the management board was forced to file for insolvency, Reuters reported. Frankfurt-listed Ultrasonic said in September its top executives and most of its cash reserves in China and Hong Kong had disappeared. Read more.

China property developer Kaisa Group Ltd will hold a conference call for its offshore bondholders next week to discuss a proposed restructuring plan, a notice on the company's website said, Reuters reported. The call, to be held on Monday morning at 1000 local time(0200 GMT), will provide an overview of the struggling homebuilder's current situation, the proposed acquisition of the company by Sunac China, and its restructuring plan.

A new Chinese policy plan that promotes a shift to an economy driven by consumers and entrepreneurial vigor also recognizes that the transition from state spending and smokestack industries is years away, The Wall Street Journal reported. The annual budget and policy program, unveiled by the government Thursday, acknowledged China’s entrance to an era of slower growth and outlined the need for new sources of job creation by nurturing innovative small businesses.

Troubled Chinese property developer Kaisa Group announced an onshore debt restructuring plan involving 48 billion yuan ($7.6 billion) in a move aimed at restoring the financial and operational stability of the company. The debt plan, which would not entail changes in the guarantees, securities or outstanding principal claims, involves a reduction in interest payments and tenor extensions, the Shenzhen-based developer said in a stock exchange notice. Further details about the key terms and implementation of the onshore restructuring plan would be announced later, it said.

Hours after China's central bank cut interest rates to battle slowing growth and rising deflationary risk, an official survey showed on Sunday that activity in China's factory sector contracted for a second straight month in February, the International New York Times reported. The official Purchasing Managers' Index (PMI) inched up to 49.9 in February from January's 49.8, a whisker below the 50-point level separating growth from contraction on a monthly basis, but nevertheless above more pessimistic analyst forecasts for a 49.7 reading.

African Minerals said on Friday its Chinese partner in its sole asset, the Tonkolili iron ore project in Sierra Leone, has taken on some of its multi-million dollar debt and is demanding repayment, Reuters reported. The loan is secured against certain assets of the borrower and by taking ownership of the debt, Shandong is in a position that could allow it to take control of the project. "The borrowers and guarantors do not have sufficient funds available to make the payment demanded," African Minerals said in a statement on Friday.