Non-performing loans in China have risen into the “trillions of renminbi” because of poor lending practices, an insolvency lawyer said, BusinessWeek reported on a Bloomberg story. “We work really closely with SASAC, the state-owned enterprise regulator in China, and there are literally trillions and trillions of renminbi of, frankly, defaulting loans already in China that no one is doing anything about,” Neil McDonald, a Hong Kong-based business restructuring and insolvency partner with Lovells LLP, said at an Asia-Pacific Loan Market Association conference yesterday.

Greece’s debt crisis returned to financial markets with a vengeance as agitated investors demanded the highest premiums to buy its government bonds since the launch of European monetary union over a decade ago. The yield spread between 10-year Greek bonds and benchmark German Bunds widened dramatically on Wednesday, by almost 0.7 percentage points at one point, in what one trader called a “capitulation” to sellers worried about Greece’s ability to refinance its debt.

Greece is wooing China to buy up to €25 billion of government bonds, a move that underlines Beijing’s growing financial power, as Athens struggles to fund soaring public debt, The Irish Times reported. Goldman Sachs, the US investment bank, has been promoting a Greek bond sale to Beijing and the State Administration of Foreign Exchange (Safe), which manages China’s $2,400 billion foreign exchange reserves, said people familiar with the issue.

Several Chinese banks have ordered some branches to suspend new lending for the rest of this month, people familiar with the situation said on Tuesday, as concerns rippled around markets in the region that China may take more aggressive action to rein in bank credit that is fuelling the country's rapid growth, The Wall Street Journal reported. The moves by some banks to temporarily choke off credit come amid reports of a fresh deluge of new lending in the first several weeks of this year after a year of blow-out lending in 2009.

Chinese regulators have told some banks to temporarily halt lending amid growing fears of asset bubbles and inflation. The renewed efforts to rein in credit growth follow a burst of frantic lending activity by Chinese banks that have raised concerns about overheating in the Chinese economy. In the first two weeks of January alone, banks extended as much as Rmb1,100bn ($161bn) in new loans, analysts and bankers told the Financial Times. If banks were to sustain that pace of lending, they would pump nearly Rmb30,000bn into the economy this year.

Premier Wen Jiabao signaled that Beijing is closely considering the risks associated with its stimulus policies in comments to the State Council posted on the central government's Web site Tuesday, The Wall Street Journal reported. China will maintain "reasonable and ample" money and credit supply in the first quarter, he said.

China backed off its giant stimulus effort Tuesday by reducing the amount of cash banks have available to lend, in the clearest signal yet that the government is worried that the nation's credit binge now risks igniting inflation, The Wall Street Journal reported. China's stimulus program, led by a government order to banks in late 2008 to flood the economy with cash, helped to carry China through global financial turmoil. The economy is now poised to surge past Japan this year as the world's second-largest economy after the U.S.

As much of the world struggles to clamber out of a serious recession, a gradual flow of economic power from West to East has turned into a flood, The New York Times reported. Beijing’s state-run news media, indulging in a moment of self-congratulation, have hailed China’s new economic prominence as proof of national superiority. The country’s economic miracle, the newspaper People’s Daily boasted last week, exists because its leaders — unlike those in other, unnamed nations — can make quick decisions and ensure underlings carry them out.

With property prices soaring in key cities, many investors and bankers worry that China has the next great real estate bubble waiting to be popped, The Washington Post reported. The Chinese government is worried, too. On Sunday, the nation's cabinet, citing "excessively rising house prices" in some cities, said it will monitor capital flows to "stop overseas speculative funds from jeopardizing China's property market." It also said that any Chinese family buying a second home must make a down payment of at least 40 percent.

Chinese Premier Wen Jiabao warned of growing inflation expectations in a rare domestic media interview, expressing concerns about the nation's fast-rising real-estate prices and acknowledging that Beijing may be paying a price for its aggressive response to the global financial crisis, The Wall Street Journal reported. Speaking to the state-run Xinhua news agency on Sunday, Mr. Wen also flatly rejected foreign criticism of China's exchange-rate policy, saying that stability in the yuan's value helps the global economy and that China won't bow to pressure to let it appreciate.