China's Shunfeng Photovoltaic International Ltd has signed a preliminary deal to buy the main China unit of Suntech Power, two sources close to the matter said, Reuters reported. The framework agreement with Wuxi Suntech's administrator brings the closely watched restructuring of the firm's $1.75 billion debt closer to completion after Suntech Power defaulted on a $541 million dollar convertible bond in March.

The Chinese government has room to deal with rising debt levels, which has become a “serious concern,” according to Zhu Min, a deputy managing director at the International Monetary Fund. While debt accumulation by companies and local government is “way too high,” the government has a lot of “policy buffer,” including $3.5 trillion foreign reserves, to resolve the problems, Zhu, a former deputy governor at People’s Bank of China, said at a panel during the IMF meeting in Washington yesterday.

Average new-home prices in 70 Chinese cities rose faster in August than at any time since January 2011 despite government measures to keep property prices in check, spurred by strong home-buying in major cities, The Wall Street Journal reported. It was the seventh straight month of price increases compared with year-earlier levels, data released Wednesday by the National Bureau of Statistics showed. Month-on-month price gains also picked up, after moderating for the previous four months, signaling limited impact of the government's tightening measures.

A Chinese government researcher estimates that China's practices of borrowing heavily to fuel investment-driven growth have as much as doubled local government debt in just two years to around 20 trillion yuan ($3.3 trillion). The researcher, Liu Yuhui of the Chinese Academy of Social Sciences, said the current dependence on heavy borrowings to drive rapid economic growth is unsustainable. "My point is that there has been a notable rise in the overall government debt level over the past two years," Mr.

Investors have made billions betting against economies in which debt is rising and home prices are soaring. They have had particular success targeting the banks that fund these booms. Right now, their target is China, The Wall Street Journal reported. Some compare China to the U.S. in 2007. Others cite Japan before the 1989 real-estate bust. China bulls acknowledge the risks but say the government has the money and expertise to defuse the problems.

China's central bank signaled it is considering speeding up the loosening of controls on investment flows in and out of China, indicating determination to press ahead with financial reform despite growing financial risks, The Wall Street Journal reported. With a stable economy, healthy banking system and an exchange rate "approaching balance," the timing is right for China to push capital-account opening, wrote Sheng Songcheng, head of the central bank's statistics department in an article in the central bank's own Financial News Thursday.

Chinese bank executives signaled concern that bad loans could rise, as earnings continued to slow in the face of declining economic growth, The Wall Street Journal reported. China's biggest bank by assets, Industrial & Commercial Bank of China Ltd. 601988.SH +0.76% said Thursday its first-half net profit rose 12.4% from a year earlier to 138.35 billion yuan ($22.62 billion). Bank President Yi Huiman said the bank would remain cautious against a potential pickup in bad loans after its non-performing loan ratio increased marginally over the first half of the year.

Major Chinese cities are turning to fresh measures to temper home-buyer enthusiasm amid a renewed surge in housing prices, but analysts say the moves are unlikely to halt the rise, The Wall Street Journal reported. Beijing's local housing bureau has made it tougher for property developers to presell apartments in recent weeks, giving approvals only to projects that have completed a sufficient amount of construction.

The young urban Chinese who have entered the workforce over the past decade grew up amid plenty, and their views about saving and spending bear little resemblance to those of their parents. Their willingness to borrow for today and worry about repayment tomorrow is beginning to reshape China’s debt dynamics, the Financial Times reported in an analysis. Of the three kinds of debt – government, corporate and household – the latter is barely on the radar as a risk in China. Household debt is about Rmb15tn ($2.5tn), or a third of gross domestic product, according to RBS.

For most of its past 30 years of growth averaging 10.5 per cent, China did not rely on credit. But it has become ever more reliant on debt since the global financial crisis, drawing on banks, bonds and an array of lightly regulated institutions to keep its economy roaring. This debt dependency has put China at a dangerous crossroads. If the government is serious about containing financial risks, growth may slow sharply as it weans the country off debt, burdening the global economy. Yet that prospect is less frightening than the alternative.