China’s economy is sputtering as evidence mounts that a nationwide property bubble is on the point of bursting, the Financial Times reported. Virtually every indicator for economic growth in China turned down in April as the all-important real estate market saw sales fall 7.8 per cent in renminbi terms in the first four months from the same period a year earlier. Investment in real estate is the single most important driver of the Chinese economy and a crucial factor in global commodity demand and pricing.

China’s broadest measure of new credit fell last month as authorities extended their campaign to tame financial dangers even as construction and manufacturing data point to risks that the economy’s slowdown will worsen, Bloomberg News reported. Aggregate financing was 1.55 trillion yuan ($249 billion) in April, the People’s Bank of China said yesterday in Beijing, compared with 2.07 trillion yuan in March. New local-currency bank loans were 774.7 billion yuan, down from 1.05 trillion yuan the previous month.

Chinese President Xi Jinping said the nation needs to adapt to a “new normal” in the pace of economic growth and remain “cool-minded” amid a slowdown that analysts forecast will lead to the weakest expansion since 1990. China’s growth fundamentals haven’t changed and the country is still in a “significant period of strategic opportunity,” Xi said, according to a Xinhua News Agency report on the central government website on May 10. At the same time, the government must prevent risks and take “timely countermeasures to reduce potential negative effects,” he said.

China's central bank said it would strengthen monitoring of default risk from loans to the property sector, local-government financing companies and industries struggling with overcapacity, The Wall Street Journal reported. In its first-quarter monetary report, the People's Bank of China said Tuesday that it would aim to prevent these risks from spreading more widely through the financial sector. Several smaller property developers have defaulted on loans in recent months amid slower growth in the housing market and the economy overall.

Workers at Yue Yuen Industrial, which makes running shoes for Nike and Adidas at a big factory complex in Gaobu, said it underpaid their pensions for years, the Financial Times reported. After 11 days of protest, the Dongguan municipal government handed them a rare victory by saying the company should have based contributions on a higher pay level. Yue Yuen estimates that it will have to pay an additional $31m just this year after agreeing to base pension payments on workers’ total pay, including overtime.

China’s great real-estate bust has begun, says Nomura. A combination of a huge oversupply of housing and a shortage of developer financing is producing a housing market downturn that could drive China’s GDP to less than 6% this year, The Wall Street Journal Real Time China blog reported. “To us, it is no longer a question of ‘if’ but rather ‘how severe’ the property market correction will be,” three Nomura analysts wrote in a report released Monday. And there isn’t much the government can do to head off problems.

Smaller Chinese banks have ramped up their shadow lending activity, adding to the financial risks that threaten to trip up the world’s second-biggest economy. The 2013 results of unlisted banks, published over the past week, reveal that city-based lenders have been among the most aggressive in China in using complex credit structures to evade regulatory controls and issue higher-yielding loans. These shadow loans have been profitable for banks so long as growth has been strong.

Loans between companies is the fastest-growing category of shadow banking in China, but with next to no data on where such loans are going, their effect on the economy is a black box, The Wall Street Journal China Real Time blog reported. But two academic papers published over the last year on such lending – known as entrusted loans – offer a rare glimpse into how these loans work. The findings? Entrusted loans may have become the single most important factor keeping China’s property developers afloat.

A network of loan guarantees set up to improve companies' access to credit in one of China's richest districts is creating new risks of default as some debts sour, another sign of how private firms are bearing the brunt of an economic slowdown, Reuters reported. Chinese media have reported on a credit crunch developing among steel and textile manufacturers in Hangzhou city, 175 km (110 miles) south of Shanghai in Zhejiang province, as the failure of some to repay loans pushes their burden onto healthier firms.

China’s bad-loan ratio rose “significantly” in the first quarter, increasing risks for the nation’s banking industry, according to the nation’s largest manager of soured debt, Bloomberg News reported. The business environment this year has been “grim and complicated” as lenders face pressures on asset quality, liquidity and lending margins, China Huarong Asset Management Co. Chairman Lai Xiaomin said during an internal meeting on April 15, according to a statement today on the website of the Beijing-based company.