China

The Shanghai government has approved a city-owned investment company to buy non-performing loans from local banks, state media reported on Friday, becoming the latest Chinese local government bracing for an expected rise in bad debt, Reuters reported. Shanghai's launch of a dedicated "bad loan bank" follows similar moves by the wealthy eastern provinces of Jiangsu and Zhejiang. Analysts expect a rise in bad loans in the coming years as China's economy slows, with loans to local governments and industries suffering from overcapacity a key source of concern.

China’s leaders spurred speculation they will allow the country’s $21 trillion debt mountain to inflate after refraining from cutting their annual economic-growth target, Bloomberg News reported. Analysts at Australia & New Zealand Banking Group Ltd. and Nomura Holdings Inc. said authorities will need to loosen monetary policy, after Premier Li Keqiang yesterday announced a goal of 7.5 percent growth, the same target as last year. Li said China will seek an “appropriate” increase in credit.

China’s property trusts, grappling with repayments equivalent to the size of Puerto Rico’s economy, face rising default risks as a former central bank adviser dubs real estate the biggest threat to the economy, Bloomberg News reported. The trust funds must repay 634 billion yuan ($103 billion) of debt this year, up 50 percent from 2013, according to estimates from Haitong Securities Co., the nation’s second-biggest brokerage. The yield on the 2014 notes of Myhome Real Estate Development Group Co., based in the central city of Wuhan, jumped 185 basis points in the past year to 7.78 percent.

Zhang Hongbao, who’s run a funeral home in Shanghai for more than a decade, says he can’t recall the last time business was so dead, Bloomberg reported. “Government officials don’t dare to spend too much on funerals,” Zhang, owner of Shanghai Funeral Service (China) Co., said in an interview. “It’s the peak of the anti-corruption drive.

Suntech Power Holdings Corp., the Chinese solar-panel maker that defaulted on $541 million of bonds, filed for bankruptcy court protection from U.S. creditors as it liquidates in the Cayman Islands, Bloomberg News reported. The company filed its Chapter 15 petition late Friday in U.S. Bankruptcy Court in Manhattan as part of a restructuring agreement with petitioners seeking an involuntary filing last year. In November, Suntech told the court that the proposed action by U.S. creditors could derail restructuring efforts.

China’s central bank has drained Rmb48bn ($7.9bn) from money markets, an unexpected move that signals its concern with the boom in lending at the start of the year, the Financial Times reported. The People’s Bank of China withdrew the cash by issuing 14-day bond repurchase agreements. It was its first time using repos to drain liquidity from the money market in eight months. The central bank typically gauges demand from banks the day before conducting open-market operations, but on this occasion it issued the repos without advance warning, traders said.

China's Wanxiang Group won court approval Tuesday to take over failed luxury hybrid-car maker Fisker Automotive Inc. after successfully outbidding Hong Kong billionaire Richard Li in an auction, The Wall Street Journal reported. Mr. Li's takeover vehicle, Hybrid Tech Holdings, signaled it would move to collect most of the $149.2 million Wanxiang is paying, exercising its rights as Fisker's senior secured lender to trump the claims of Fisker's unpaid suppliers. Judge Kevin Gross approved the sale of Fisker's assets to Wanxiang at a hearing in the U.S.

A high-yield investment product backed by a loan to a debt-ridden coal company failed to repay investors when it matured last Friday, state media reported on Wednesday, in the latest sign of financial stress in China's shadow bank sector, Reuters reported. The product, which raised 289 million yuan ($47.7 million) from wealthy clients of China Construction Bank (CCB) , China's second-largest lender, was created by Jilin Province Trust Co Ltd and backed by a loan to a coal company, Shanxi Liansheng Energy Co Ltd. "It matured on Feb.

Sounding warnings that could have been made 20 or even 30 years ago, one of China’s most renowned economists said the country’s economy faces a “very difficult” year as it continues confronting a host of problems that have intensified over the past decade, the International New York Times Sinosphere blog reported.

China pledged Friday to create a unified pension system to boost consumption and encourage labor mobility, a step toward empowering its vast rural poor, The Wall Street Journal reported. China's State Council, or cabinet, said it planned to create a unified pension system for residents in both rural and urban areas. Funding would come from contributions from individuals, the central government, local governments and social institutions, the State Council said on the central government's website.