Relatives of at least five current and former members of China's top leadership are shareholders in many offshore companies, allowing them to conceal their assets, according to a report from the International Consortium of Investigative Journalists (ICIJ), the South China Morning Post reported. While being a shareholder in an offshore company doesn't constitute a crime or indicate wrongdoing, the report from the US-based group was released at a crucial moment.

China is moving ahead with reforms to overhaul its financial system by helping banks clean up their balance sheets and launching a trial program to give smaller lenders easier access to cash, The Wall Street Journal reported. The actions join a swift injection of liquidity by the central bank Tuesday into the banking sector as Beijing seeks to avert a cash crunch ahead of the Lunar New Year holiday when demand for funds rise. Under new regulations that took effect this month, Chinese banks have greater freedom to write off small loans that have turned sour.

A high-yielding investment product based on a loan to an indebted coal company is offering the latest test of China's willingness to permit defaults in its shadow banking system, Reuters reported. If the product, which is scheduled to mature on Jan. 31, fails to pay out as promised, it could shatter the widespread assumption that even risky investments carry implicit guarantees from the government and state-owned banks.

China's government is gearing up for a spike in nonperforming loans, endorsing a range of options to clean up the banks and experimenting with ways for lenders to squeeze value from debts gone bad, The Wall Street Journal reported. Write-offs have multiplied in recent months. Over-the-counter asset exchanges have sprung up as a way for banks to find buyers for collateral seized from defaulting borrowers and for bad loans they want to spin off.

China’s banking regulator told lenders to publish data including off-balance-sheet assets and interbank liabilities as the government steps up scrutiny of the shadow-finance industry. Lenders with total assets of 1.6 trillion yuan ($264 billion) or more must publish 12 indicators within four months of the end of each financial year, the China Banking Regulatory Commission said in a statement yesterday. The requirement is in line with rules published by the Basel Committee on international banking regulation in July, the CBRC said.

China will allow a batch of three to five banks funded by private investment this year to operate under a trial as part of the country’s financial reforms, according to the China Banking Regulatory Commission, Bloomberg News reported. China will guide private investment to participate in the restructuring of existing banks and explore lowering the threshold for foreign banks to enter the industry, the banking regulator said in a statement on its website yesterday. The commission will step up its support of the Shanghai free trade zone, according to the statement.

Fisker Automotive, the bankrupt maker of a plug-in hybrid sports car, asked a federal judge to approve its proposed sale to a Hong Kong tycoon rather than a Chinese suitor that Fisker alleged was to blame for its failure. A courtroom showdown is set for January 10 that will determine the future of the defunct car maker, which was launched with a controversial U.S. government loan. U.S. Bankruptcy Court Judge Kevin Gross must decide if Fisker's business will be put to open auction or sold to an affiliate of Richard Li as the company has proposed.

China's largest auto parts company made a surprise bid for Fisker Automotive just days before the bankrupt maker of the Karma plug-in hybrid sports car was to be sold to a Hong Kong tycoon, according to court documents, Reuters reported. Fisker creditors asked the U.S. Bankruptcy Court in Wilmington, Delaware, to scrap Fisker's agreed sale to a company affiliated with Richard Li and instead hold an open auction at which auto parts supplier Wanxiang America Corp plans to bid.

Chinese President Xi Jinping, named on Monday to head the committee overseeing China's economic overhaul, must quickly figure out how to keep China's burgeoning local government debt from tanking the world's second-largest economy, The Wall Street Journal reported. Shortly before the announcement of Mr. Xi's new job, China's National Audit Office said debt and guarantees issued by local governments rocketed 67% to 17.9 trillion yuan ($2.95 trillion) midyear 2013 since the last tally at the end of 2010, when it was 10.7 trillion yuan.

China’s financial system is in danger of becoming too big to bail out, The International New York Times reported. Official bank lending has more than doubled since the global financial crisis, growing nearly twice as fast as the overall economy.