According to Chinese officials Monday, Chinese banks have encountered high default risks on part of loans they have lent to local governments across the country, the Global Times reported. China's commercial banks have identified it to be at least one-fifth of the 7,700-billion-yuan loan ($1,135 billion). Though these questionable loans not always go bad, the country's non-performing loan (NPL) ratio is almost certain to increase slightly by the end of the year, said an official from the China Banking Regulatory Commission (CBRC).

PCCW and its chairman's privately owned fund plan to rescue debt-laden Vivacom, Bulgaria's biggest fixed-line operator, by jointly investing €180 million ($232 million) in return for a 51 percent stake, a newspaper reported on Wednesday. PCCW executive director Alex Arena met Vivacom's senior lenders on June 22 to discuss the matter, the South China Morning Post reported, citing people with direct knowledge of the meeting. It was unclear how much of the investment would come from PCCW, the paper said.

China, the world’s largest foreign exchange holder, bought several hundred million euros of Spanish bonds last week as Asian investors returned to the eurozone peripheral market after a two-month hiatus, the Financial Times reported. China’s State Administration of Foreign Exchange, or Safe, which manages the reserves under the country’s central bank, was allocated up to €400m ($505m) of Spanish 10-year bonds in a debt deal last Tuesday, according to people familiar with the situation.

China moved unexpectedly over the weekend to make its exchange rate more flexible, but quickly damped the idea that the move would trigger a dramatic revaluation of the yuan by saying it would make the adjustment "gradually,” The Wall Street Journal reported. The decision by the world's third-largest economy follows heavy pressure by the U.S. and other members of the Group of 20 major economies. It could eventually boost the spending power of China's own consumers, easing the strains with other nations caused by its long reliance on cheap exports.

Greece's debt-ridden economy has received unexpected endorsement from China as the two countries announced multibillion euro accords to boost cooperation in fields as diverse as shipping, tourism and telecommunications, The Guardian reported. The deals, which will see Greek olive oil being exported to China, were a welcome relief for a government smarting over Moody's move hours earlier to downgrade the nation's credit rating to junk. As investors moved in the other direction, the world's pre-eminent emerging economy embraced Greece.

Spurred on by government incentives and bargain-basement prices, the Chinese are planning to pump hundreds of millions -- perhaps billions -- of euros into Greece even as other investors run the other way, The Washington Post reported. The cornerstone of those plans is the transformation of the Mediterranean port of Piraeus into the Rotterdam of the south, creating a modern gateway linking Chinese factories with consumers across Europe and North Africa.

China Southern Airlines is now Asia's largest carrier by passenger numbers after overtaking troubled Japan Airlines Corp, or JAL, according to figures provided by the two companies, Agence France-Presse reported. China Southern actually overtook JAL in 2008 when its passenger volume rose to 58.24 million, according to data supplied by the Chinese carrier to AFP on Wednesday. The airline, which has China's largest fleet, extended its lead even further last year as its numbers climbed to 66.28 million passengers, China Southern said.

China’s biggest developers are borrowing record amounts in Hong Kong, taking advantage of lower interest rates to circumvent a lending crackdown at home, Bloomberg reported. While banks demand at least 5.2 percent in annual interest for three-to-five year money in mainland China, the cost of credit in Hong Kong dollars has fallen to the least since November 2004, according to data compiled by Bloomberg. China Overseas Land & Investment Ltd. agreed to an HK$8 billion ($1.03 billion) loan in February that pays 1.45 percent at current market levels, the data show.

China's real estate rush, once confined to a handful of leading cities, has spilled into the hinterlands with a ferocity reminiscent of American expansion into exurbs like the Inland Empire, the Los Angeles Times reported. "The situation in Hefei is a symbol of the craziness in China's real estate market," said Cao Jianhai, a professor of economics at the Chinese Academy of Social Sciences, a government think tank. "Prices in second- and third-tier cities are increasing more dramatically than in the first tier.

France and Germany traditionally have been the “motor” of the European Union, but relations between the two countries are badly strained over the Greek debt crisis, which is just the latest example of a new German willingness to resist the demands of Europe and assert its self-interest under Chancellor Angela Merkel, The New York Times reported. The European Union is facing a serious crisis over financing and its currency, the euro.