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.

Industrial & Commercial Bank of China Ltd. said it could raise up to $11 billion from debt markets over the next nine months, in the latest effort by a major Chinese bank to replenish capital amid widening concerns about potential bad loans, The Wall Street Journal reported. The bank, one of the world's largest by assets, has already raised 170 billion yuan ($20 billion) from the capital markets over the past two years. During that period, China's major banks raised more than $100 billion from equity and debt markets both locally and in Hong Kong.

China's massive economic-stimulus program has supported near double-digit growth, but also stoked inflation, piled up debt and fueled another unwelcome development: social unrest, The Wall Street Journal reported. In 2010, China was rocked by 180,000 protests, riots and other mass incidents—more than four times the tally from a decade earlier. That figure, reported by Sun Liping, a professor at Tsinghua University, rather than official sources, doesn't tell the whole story on the turmoil in what is now the world's second-largest economy.

Guarantors have become the lenders of last resort to small manufacturers who increasingly are getting squeezed by tight credit as well as soaring wages and other production costs, The Wall Street Journal reported. These private operators, using money raised from property developers, coal miners or other cash-rich individuals, aim to fill the funding void left by state banks that many say have all but stopped lending to small businesses. In return, they charge their clients a fee on top of high interest rates imposed on the loans.

As policy makers from the U.S. and Europe gathered in Jackson Hole, Wyo., to discuss ways to revive a fragile global recovery, China's central bank was issuing a secret memo to further rein in lending in the world's second-largest economy, The Wall Street Journal reported.

China broadened the base of reserves it requires commercial lenders to deposit with the central bank to control liquidity and limit inflation, economists said, Bloomberg reported. Reserve requirements are being extended to customers’ margin deposits, a move that may drain 900 billion yuan ($140 billion) from the banking system over six months, Bank of America Merrill Lynch economist Lu Ting said in an e-mailed note on Aug. 26. Mizuho Securities Asia Ltd. cited similar information.

China's big banks reported hefty profits in the first half of this year, but signs of strain are showing from their massive lending binges and as they struggle to meet tougher capital requirements, The Wall Street Journal reported. Profits of the nation's five biggest banks by assets, led by Industrial & Commercial Bank of China Ltd., were buoyed in part by a greater focus on business that generates fee income, such as credit cards and wealth-management products.

Bad loans at Chinese banks will rise to “shockingly high” levels, eroding profits and slowing growth in the world’s second-biggest economy, said Vontobel Asset Management Inc.’s Rajiv Jain, who runs some of this year’s best-performing mutual funds, Bloomberg reported. China’s local governments are struggling to repay their debt and “frothy” real-estate markets may leave banks exposed to falling prices, Jain said in an Aug. 16 phone interview.

China Petrochemical Corp.'s partner in its only oil production venture in Australia appointed administrators Monday, a move that underscores how some of China's earliest investments in the resource-rich country have struggled to meet expectations, The Wall Street Journal reported. AED Oil Ltd. raised US$561 million in 2008 when it sold 60% of its underperforming Puffin oil field in the Timor Sea to China Petrochemical Corp., also known as Sinopec.