While many businesses in the United States struggle to stay afloat and workers collect unemployment checks, China has the opposite problem: an economy, pumped up by expansive lending by state-controlled banks, which is growing too fast to keep inflation and speculation in check, the International Herald Tribune reported. Beijing’s solution: Create an artificial shortage of credit.

It’s “too soon” for China to discuss further bond purchases from Europe’s revamped rescue fund, Vice Finance Minister Zhu Guangyao told reporters in Cannes, France, on the eve of a summit of world leaders, Bloomberg reported. While there are proposals to bolster the European Financial Stability Facility, “there are no concrete plans yet so it’s too early to talk about further investments in these tools,” Zhu said today. Zhu said the rescue fund, already part of China’s portfolio, is an “important tool” to address the sovereign debt crisis.

Efforts to curb inflation in China are having some painful side-effects. A squeeze on bank lending has prompted some businesses short of cash to stop paying wages to blue-collar workers, The Economist reported. Even the much-vaunted state sector is feeling the pinch. Work has all but ground to a halt on thousands of kilometres of railway track, and many of the network’s 6m construction workers have been complaining about not being paid for weeks or sometimes months.

The turnaround plan presented Monday for troubled Swedish carmaker Saab Automobile AB is far from complete, said Martin Larsson, the company's executive director of new business development and, according to speculation in Swedish media, the company's next chief executive. The Swedish district court in Vanersborg on Monday gave the company the go-ahead to continue its reorganization under creditor protection, after Chinese companies Pang Da Automobile Trade Co. and Zhejiang Youngman Lotus Automobile Co.

China is very likely to contribute to the eurozone’s bail-out fund but the scope of its involvement will depend on European leaders satisfying some key conditions, two senior advisers to the Chinese government have told the Financial Times. Any Chinese support would depend on contributions from other countries and Beijing must be given strong guarantees on the safety of its investment, according to Li Daokui, an academic member of China’s central bank monetary policy committee, and Yu Yongding, a former member of that committee.

Troubled Swedish car maker Saab Automobile AB edged closer to bankruptcy after it said it had terminated rescue funding agreements with Chinese auto makers Youngman Lotus Automobile Co. and Pang Da Automobile Trade Co., though the three companies remained in talks, The Wall Street Journal reported. Saab is restructuring its operations under creditor protection and is trying to avoid being closed, after the administrator of the restructuring process on Friday moved to have the company thrown out of receivership and declared insolvent.

A scramble to retain customers pulling their money from traditional deposit accounts is causing Chinese banks to use a growing number of alternatives that regulators fear could undermine the financial underpinnings of the economy, the Financial Times reported. China places a ceiling on deposit rates as a way of limiting competition among banks and to fortify the capital positions of institutions that had effectively been insolvent a decade ago.

Beijing is not pleased with the signals that the market for Chinese bank shares is sending about bank fundamentals or the state of the economy. So it is doing what it usually does with information it doesn't like: Cover it up. Central Huijin, an arm of China's sovereign wealth fund that is in turn an agent of the State Council, has started buying the shares of Chinese banks listed in Shanghai and Hong Kong to pump up prices, The Wall Street Journal reported in a commentary. If Japan's "price-keeping operations" are anything to go by, this will only work for a short time.

A bet on China's banks is a bet on Beijing's political decisions, The Wall Street Journal Heard on the Street blog reported. That was underlined late Monday when Central Huijin Investment, the domestic arm of the country's sovereign-wealth fund, waded into the markets to buy shares in the big four banks: Industrial & Commercial Bank of China, Agricultural Bank of China, Bank of China, and China Construction Bank. Huijin said it would buy more shares over the next 12 months. The bank stocks got a boost, as did a previously sagging market overall.

Troubles among small manufacturers in the bellwether Chinese city of Wenzhou are putting a cloud over a key part of China's economy, further shaking investor confidence and underscoring the stakes as Beijing tries to strike a balance between fostering growth and containing inflation, The Wall Street Journal reported. More than two-dozen small, private businesses in the eastern city known for its entrepreneurial success have gone belly up in recent days because they couldn't repay maturing bank loans, according to state media reports.