China's rating agencies are likely to keep a long-held assumption of government bailouts built into most ratings despite the country's first domestic bond defaults and warnings from Beijing that there is no blanket guarantee of support, Reuters reported. Last month, Shanghai Chaori Solar Energy Science and Technology (Chaori), defaulted when it missed an interest payment on a bond, and this week a newspaper reported a small construction materials company had also defaulted on an interest payment.

Is China different? Or must its borrowing binge, like most others, end in tears? This is now a hotly debated topic, the Financial Times reported in a commentary. On one side are those who predict a Chinese “Minsky moment” – a point in the credit cycle at which, as Hyman Minsky foretold, panic grips the financial system. On the other side are those who insist that China’s debt mountain poses no threat to the planned growth of the economy: the authorities say it will be above 7 per cent and above 7 per cent it will be. Which side is right? “Neither” is my answer.

The Securities and Futures Commission has obtained a Hong Kong court order to appoint interim receivers to take over the management of decorative paper maker Qunxing Paper after its major subsidiary secretly started a bankruptcy proceeding on the mainland, the South China Morning Post reported. The regulator said yesterday that it got an order from the Court of First Instance, for which it urgently applied last Friday, to appoint Roderick Sutton, Fok Hei-yu and John Batchelor of FTI Consulting to act as interim receivers to investigate Qunxing's affairs.

The specter of default in China’s trust loans market is deepening the distress of property developers that also borrowed in dollars, Bloomberg News reported. Eighteen companies owing $15.2 billion, from behemoth China Vanke Co. to junk-rated Glorious Property Holdings Ltd., have “material exposure” in excess of 10 percent to trust financing, a form of non-bank lending that’s helped homebuilders proliferate in China, Moody’s Investors Service said. This year alone, the number of Chinese junk developer bonds whose yields have increased to distressed levels has almost doubled to 19.

China’s biggest banks more than doubled the level of bad loans they wrote off last year, in a sign that financial strains are mounting as growth in the world’s second-largest economy slows, the Financial Times reported. The five biggest Chinese banks, which account for more than half of all loans in the country, removed Rmb59bn ($9.5bn) from their books in debts that could not be collected, according to their 2013 results. That was up 127 per cent from 2012, and the highest since the banks were rescued from insolvency, recapitalised and publicly listed over the past decade.

Chinese investment conglomerate Citic Group, whose businesses span property, mining, energy, banking and a soccer team, plans a massive restructuring that will allow it to tap more overseas capital for its sprawling empire, the Financial Times reported. Citic’s announcement follows on the heels of plans from a number of other Chinese state-owned enterprises (SOEs) – including oil giant Sinopec – to raise money from the sale of a profitable business without giving up control.

Hundreds of people rushed on Tuesday to withdraw money from branches of two small Chinese banks after rumours spread about solvency at one of them, reflecting growing anxiety among investors as regulators signal greater tolerance for credit defaults. The case highlights the urgency of plans to put in place a deposit insurance system to protect investors against bank insolvency, as Chinese grow increasingly nervous about the impact of slowing economic growth on financial institutions. Regulators have said they will roll out deposit insurance as soon as possible, without giving a firm deadline.

Chinese steel mills were suffering a medley of woes in mid-March as sales slowed, production levels slumped and profits plunged, according to an investment bank survey published on Tuesday that foreshadows the rising risk of debt defaults in the world’s largest steel producer, the Financial Times beyondbrics blog reported.

The pace of migration of rural Chinese to cities, a dynamic hailed by Premier Li Keqiang as key to the nation’s development, is set to slow by a third in coming years, deepening economic-growth concerns, Bloomberg News reported. A government report released this month projected a 6.3 percentage-point rise in the share of people living in cities from 2013 to 2020 -- down from a 9.4-point gain the previous seven years. Nomura Holdings Inc. estimates that slower urbanization will slice as much as half a percentage point from annual gross domestic product growth over the next half decade.

A denial by China's central bank that it is involved in emergency talks to bailout a troubled property developer reinforced signals Beijing is now more willing to let banks and other investors take losses on loans, Reuters reported. Media reports said the central bank was in talks with Zhejiang Xingrun Real Estate Co, which government officials have said is on the brink of bankruptcy. That led to financial market speculation the government could bail out the company. However, the reports "did not accord with reality", the People's Bank of China said in a post on China's Twitter-like Weibo.