China is bailing out the nation’s heavily indebted local governments, relying on trusted methods to keep its financial system stable despite promises to allow market forces to play a greater role, The Wall Street Journal reported. Beijing is permitting provinces to issue at least 2.6 trillion yuan ($419 billion) in bonds in 2015, the first local government issuances in more than 20 years, to stave off a debt crunch. Local administrations have accumulated some 18 trillion yuan, equivalent to a third of China’s economy, in bank loans and bonds to fund risky land and property deals.

China has given its fifth-largest bank the green light to pursue a market-based reform plan as Beijing seeks to improve efficiency at state-owned companies and counteract a far-reaching economic slowdown, the Financial Times reported. But privatisation will play only a limited role in the shake-up, the latest sign that the Communist party has no intention of relinquishing control of “strategic sectors” such as finance, energy and telecommunications.

The Chinese government risks “real damage” to the economy if it does not hasten reform of China’s state-owned enterprises and overhaul a debt-fuelled growth model, Hank Paulson has warned, the Financial Times reported. For more than two decades the former US Treasury secretary and Goldman Sachs chief has worked closely with pivotal Chinese political figures such as Wang Qishan, currently head of the Chinese Communist party’s anti-graft bureau, and visits Beijing frequently.

Renhe Commercial appears to have a well-fortified business model: It builds air raid shelters across China for the government, outfitting them as underground shopping malls for use during peacetime, the International New York Times reported. But even that strategy has not been enough to protect the company from the fallout from China’s property market slump. Like many Chinese developers, Renhe is struggling with financial losses and debt, and it has been looking for other sources of income.

Rating agency Moody's warned on Wednesday that financial distress will rise among Chinese companies amid a slowing economy and a government reform agenda which is intended to allow markets to play a decisive role. But policy easing and government support would prevent corporate distress from rising so much it could cause systemic risk to onshore and offshore markets, it said. The agency also underscored the worsening covenant quality of property high yield bonds, although these agreements offered more protection than those in other regions.

The headline currency story of this year is about the negotiations between Greece and the “institutions” over whether its currency remains internationally usable . Much less noticed are the negotiations between China, which is about a hundred times larger than Greece, and the legacy financial powers over the degree to which the renminbi becomes more internationally usable. While renminbi internationalisation is a process, not an event, an announcement is being orchestrated for September.

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.