A bank raises money from its customers to make an off-the-books investment packaged by a private investment company as a loan to a pawn shop, which in turn makes loans to companies that banks aren’t willing to lend to because they’re not comfortable with the credit risk. Welcome to the wheels-within-wheels of China’s shadow banking system, the China Real Time blog reported. But the complexity being unwound by the recent default of a $22.5 million wealth management product sold by Huaxia Bank Co. to its customers doesn’t stop there.

The Crafar family farms put into receivership three years ago are now legally in the hands of their new Chinese owner, Radio New Zealand reported. The Shanghai Pengxin group had to overcome legal challenges from New Zealand farming and Maori interests but finally took possession of the 16 North Island farms on Friday. Spokesman Cedric Allan says the aim is to lift production on the 13 dairy and three dry stock farms under the management of the state owned farming enterprise LandCorp.

Banks face hidden risks from their links to China's fast-growing "shadow-finance" industry, a term for all types of credit outside formal lending channels. Shadow finance in China totals about 20 trillion yuan, according to Sanford C. Bernstein & Co., or about a third the current size of the country's bank-lending market. In 2008, such informal lending represented only 5% of total bank lending. The sector is lightly regulated and opaque, raising concerns about massive loan defaults amid a softening economy, with ancillary effects on the country's banks.

China’s placement of a North Korean- educated economist and an exemplar of debt-fueled infrastructure on its ruling body may add to challenges for Communist Party leader Xi Jinping as he seeks to deepen the nation’s development, Bloomberg reported. Zhang Dejiang, who studied economics at Kim Il Sung University in Pyongyang, and Zhang Gaoli, whose city began building a mini-Manhattan under his watch, were appointed to the paramount Politburo Standing Committee in Beijing yesterday in the most important phase of a once-a-decade power transition.

China's banks have been building up their bulwarks against bad loans, underscoring the potential risk to the financial system in the world's No. 2 economy even amid other signs that growth is picking up again, The Wall Street Journal reported. China's biggest state-run banks since last week have reported double-digit profit growth for the third quarter—with some beating estimates—and flat or declining nonperforming loans, typically of 1% or less of their portfolios.

China's new bank loans fell last month to well below market expectations, but analysts said that other forms of credit outside the system of state-dominated lenders offset the drop, meaning companies weren't short of funding. Analysts have been looking for signs the nation's big banks are opening credit taps to boost the world's second-largest economy. Gross domestic product expansion decelerated to 7.6% in the second quarter, the slowest in more than three years, kindling concern that the world is losing one of its main buffers against global recession.

China’s biggest banks are resisting government pressure to lower borrowing costs amid an economic slowdown as they seek to maintain the profitability of their lending operations, officials at the top four lenders said, Bloomberg reported. The banks are limiting discounts for their best corporate clients to 10 percent of the benchmark lending rate, the officials said, asking not to be identified as they’re not authorized to speak publicly. The central bank in July began allowing lenders to offer credit at 30 percent less than the benchmark rates.

Shareholders have been quietly shoved aside in the court-ordered restructuring of Sino-Forest Corp. — and they feel a lack of legal counsel is partly to blame, the Financial Post reported. Last week, veteran Bay Street lawyer Joe Groia agreed to take up the case of disgruntled Sino shareholders, who are furious about their treatment during the CCAA process. But he may be too late.

The difficulties of factory managers in Dongguan—a bellwether export town in the southern province of Guangdong—offer a glimpse of the broader challenges facing the world's No. 2 economy as global demand cools for Chinese-made goods, The Wall Street Journal reported. China's exports were up 7.1% in the first eight months of this year from a year earlier, slowing sharply from the 20.3% growth logged for all of last year. Guangdong's exports rose 5.9%, down from 17.3% last year.

General Motors Co on Friday dismissed claims made in a $3 billion lawsuit filed by Saab's parent that the U.S. automaker deliberately bankrupted the Swedish company by blocking a deal with a Chinese investor, Reuters reported. GM, in a response filed in the U.S. District Court for the Eastern District of Michigan, said the automaker had the legal right to approve Saab's transaction with China's Zhejiang Youngman Lotus Automobile Co. "The nub of plaintiffs' complaint is that GM declined to approve the transaction plaintiffs proposed to enter into with Youngman," GM said in the filings.