The stress in China's financial system appeared to be easing today as short-term borrowing costs fell following the central bank's decision to resume using its most popular tool to inject cash into the money market, the Wall Street Journal reported today. The People's Bank of China is offering 29 billion yuan ($4.8 billion) of reverse repurchase agreements, a form of short-term lending to banks, after halting the use of the instrument for nearly three weeks, traders participating in the sale said.

A cash crunch in China pushed short-term interest rates to a new recent high today and highlighted the difficulties faced by the central bank in managing an increasingly complex and stressed financial system, the Wall Street Journal reported today. Rates rose again despite cash injections last week by the People's Bank of China, which has tried to rein in lending but is facing crosscurrents ranging from government budget tightening to quirks in bank accounting rules to distrust among banks to rising losses on loans that haven't yet been disclosed.

Bank of America has advised clients to take out default insurance against Chinese debt, warning that monetary tightening by China’s central bank risks setting off a bout of serious credit stress in 2014, The Telegraph reported. Bin Yao, the bank’s credit strategist in Asia, said Chinese bond yields have already risen to the highest in a decade as the authorities seek to rein in rampant growth of the M2 money supply and excess credit, yet markets remain “complacent” about the implications.

China Citic Bank Corp. plans to ask shareholders for permission to write off close to $900 million of nonperforming loans, an unusual move as China's bad-debt levels start to tick upward, the Wall Street Journal reported yesterday. The bank, China's seventh-largest by assets, said in statements on the Hong Kong Stock Exchange this week that it wants to more than double the amount of loans it can write off in 2013 to 5.2 billion yuan ($852 million), up from a previously planned 2 billion-yuan write-off.

Chinese company debt twice the size of Ireland’s economy will come due in 2014, spurring concern the nation is on the cusp of its first corporate bond default, Bloomberg reported. A record 2.6 trillion yuan ($427 billion) of interest and principal on securities issued by non-financial companies must be repaid next year, 19 percent more than this year and the most since China International Capital Corp. began compiling the data in 2008. Ten-year AAA corporate bond yields surged 89 basis points since Dec. 31 to 6.18 percent, touching a record 6.23 percent on Nov. 27.

Creditors of the main unit of Chinese solar panel maker Suntech Power Holdings Co Ltd on Tuesday approved a plan to restructure its $1.75 billion debts with proceeds from acquirer Hong Kong-listed Shunfeng Photovoltaic International Ltd., Reuters reported. Shunfeng announced this month it had agreed to take over indebted Wuxi Suntech Power Co Ltd for 3 billion yuan ($493 million), pending approvals from various parties including its own shareholders and Wuxi Suntech's creditors on the debt restructuring. Shunfeng has said it would use the proceeds to pay down Wuxi Suntech's debts.

Suntech Power Holdings Co., the Chinese maker of solar panels whose main unit is reorganizing in the Cayman Islands, told a Manhattan court that an involuntary bankruptcy petition against it in the U.S. could derail restructuring efforts, Bloomberg reported. The creditors seeking the U.S. bankruptcy are a “tiny minority,” holding only 0.27 percent of the company’s outstanding debt, Suntech said in papers filed yesterday seeking to have the case dismissed.

China's Suntech Power Holdings Co Ltd , once the world's largest maker of solar panels, filed for provisional liquidation, signaling that it may go out of business after years of steep declines in panel prices. Suntech's shares fell as much as 23 percent to $1.15 on the New York Stock Exchange on Wednesday. "We do think this is the end for Suntech," Raymond James analyst Ryan Berney told Reuters. Suntech filed for provisional liquidation in the Cayman Islands, where it is incorporated.

China’s swelling local-government debt is spurring speculation that authorities could sell some of their holdings of listed shares, estimated by UBS AG to total at least 5 trillion yuan ($820 billion), to make repayments, Bloomberg reported. Partial divestment of governments’ stakes in state-owned companies is one option to address the debt issue, said Yao Wei, China economist at Societe Generale SA in Hong Kong. Local governments have already made some sales over the past two years and repayment pressures mean that more are likely, said Chen Li, a Shanghai-based analyst at UBS.

China’s top four banks posted their biggest increase in soured loans since at least 2010 as a five-year credit spree left companies with excess manufacturing capacity and slower profit growth amid an economic slowdown. Nonperforming loans at Industrial & Commercial Bank of China Ltd., China Construction Bank Corp., Agricultural Bank of China Ltd. and Bank of China Ltd. rose 3.5 percent in the three months to Sept. 30 from June to a combined 329.4 billion yuan ($54 billion), according to data compiled by Bloomberg News based on third-quarter results. Profit rose to 209 billion yuan.