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.

China’s plan to rein in property prices with a record homebuilding program may worsen local debt risks even as it proves a boon to companies from domestic cement makers to Chilean copper exporters, Bloomberg reported. Premier Wen Jiabao aims to build 36 million low-cost homes by 2015, an initiative that will see 2 trillion yuan ($307 billion) added to local government borrowing by 2012, bringing it to a total 12 trillion yuan, Standard Chartered Plc estimates. The surge of loans by banks to local authorities may spark a wave of bank failures that hobble economic growth.

China's regulators plan to shift 2-3 trillion yuan (£268-404 billion pounds) of debt off local governments, sources said, reducing the risk of a wave of defaults that would threaten the stability of the world's second-biggest economy, Reuters reported. The plan is the first concrete move by the government to tackle the bad debt in local government financing vehicles. It could boost investor confidence in Chinese banks, which provided many of their loans as part of the massive economic stimulus programme launched by Beijing in late 2008 to counter the global financial crisis.

China's central bank said it will increase the role of interest rates this year in managing inflation expectations and regulating overall demand, The Wall Street Journal reported. The People's Bank of China also said that during the 12th five-year plan, which lasts until 2015, it will continue to loosen its interest-rate oversight by "gradually liberalizing the pricing rights of some financial products" at chosen financial institutions.

Suppliers to Saab Automobile remained reserved Monday after owner Spyker Cars NV said it has found a new partner in China that will provide funds for the troubled Swedish car maker, Dow Jones Daily Bankruptcy Review reported. "On paper it looks like a positive first step," said Svenake Berglie, chief executive of the Swedish supplier organization FGK. "From the supplier side, we'll wait and see what happens next." Spyker said Monday it had signed a deal Pang Da Automobile Trade Co.

Saab Automobile owner Spyker Cars NV Monday said it has found a new partner in China that will provide fresh funds for the troubled Swedish car maker, giving investors hope the company can survive after a previous deal collapsed last week, The Wall Street Journal reported. The deal, with Pang Da Automobile Trade Co., will give Saab enough money to restart production and survive for about a year, according to Spyker Chief Executive Victor Muller, but Spyker still needs to find other investors to give it a long-term future.

Saab Automobile's future was again cast in doubt Thursday after owner Spyker Cars NV said a EUR150 million ($212.2 million) investment agreement with a Chinese auto maker had fallen apart, Dow Jones Daily Bankruptcy Review reported. The announcement puts Saab Chairman and Spyker Chief Executive Victor Muller under intense pressure to come up with another deal fast. Saab's plant in Trollhattan, Sweden, has been idle since production was halted six weeks ago after suppliers stopped delivering parts because they hadn't been paid.