Chinese banks can withstand a 50% decline in property prices, the chairman of the country's banking regulator said, citing the results of the latest stress tests, The Wall Street Journal reported. Liu Mingkang told state-run China Central Television on Friday that the tests aren't a reflection of the regulator's view on China's property market, but they show banks will be able to press ahead with curbs on credit to the property sector.

Investors are worried about the health of China's banks. They're afraid—with good reason—that the massive, state-directed lending binge that was instrumental in pumping up China's GDP figures the past two and a half years will end up producing an equally massive pile of bad debt, The Wall Street Journal reported in a commentary. Barely a week goes by without new word of a troubled project or impending default. Never fear, say the banks and some analysts.

China's largest offshore oil and gas producer plans to spend $2.1 billion US buying Opti Canada Inc. in a move expected to inject cash into the troubled Long Lake oilsands project, in which the beleaguered Calgary firm has a stake, the Calgary Herald reported. The deal announced by state-owned China National Offshore Oil Corp.

When China announced a flagship program to make its currency more international in the summer of 2009, it cited "the growing call" from Chinese trading partners to use the yuan in cross-border transactions. More than a year later, the People's Bank of China touted the program as a "breakthrough," citing a surge in the amount of trade in the currency. Not everything went according to plan, The Wall Street Journal reported.

China has resumed drafting a bankruptcy law for banks, an effort that had been suspended during the global financial crisis, the news service Caixin reported on Thursday. China's banking regulator is in the preliminary stages of drafting such a law and is studying legislation in developed countries, Caixin quoted a source at the China Banking Regulatory Commission as saying, Reuters reported.

China's central bank said risks from the country's local government financing vehicles are controllable, underscoring Beijing's effort to dispel growing concerns about potential default risks associated with local government debt, The Wall Street Journal reported. The statement released late Monday by the People's Bank of China came after the National Audit Office rejected criticism of its estimate of local government debt, saying its assessment was accurate and made independently.

In the last few years, Chinese cities’ efforts have helped government infrastructure and real estate spending surpass foreign trade as the biggest contributor to China’s growth. Subways and skyscrapers, in other words, are replacing exports of furniture and iPhones as the symbols of this nation’s prowess, the International Herald Tribune reported. But there are growing signs that China’s long-running economic boom could be undermined by these building binges, which are financed through heavy borrowing by local governments and clever accounting that masks the true size of the debt.

Years ago, when Industrial & Commercial Bank of China was getting ready to list, it went through its own spring cleaning of its balance sheet, The Globe and Mail reported on a Financial Times story. It established Huarong Asset Management, a platform to take all its bad debts, while the Ministry of Finance recapitalized the bank itself. Today, Huarong has re-invented itself as a nonbank financial institution.

Swedish car maker Saab has agreed a rescue package from two Chinese car companies, handing over a majority stake in return for a cash injection to avert a potential collapse, Reuters reported. Saab owner Spyker Cars said on Monday it had signed a non-binding memorandum of understanding for Zhejiang Youngman Lotus Automobile Co to take a 29.9 percent stake in the company and Chinese car distributor Pangda (601258.SS) to take a 24 percent stake for a combined 245 million euros ($352 million).

After years of housing prices gone wild, China's property bubble is starting to deflate, The Wall Street Journal reported. Residential prices are heading downward in some major cities, damping some undesired real-estate speculation but raising the prospect that the Chinese economy may slow more rapidly than anticipated with profound consequences for global growth. Real estate is a foundation of China's phenomenal growth record in the past two decades, and its health is crucial to China's construction, steel and cement sectors.