Lending by lightly regulated financial companies outside China's formal banking system has ballooned this year, causing increasing headaches for the government in its efforts to manage the economy and control inflation, observers say, The Wall Street Journal reported. China's government has traditionally used its control of the largely state-owned banking sector to regulate the country's pace of economic growth, directing it to pump out cheap credit in good times and restricting the volume of new loans to prevent overheating.

China's biggest auto maker is close to finalizing a plan to buy a stake in General Motors Co., which is preparing for an initial public offering next week, according to people familiar with the discussions, Dow Jones Daily Bankruptcy Review reported. SAIC Motor Corp., which has built cars with GM in China since the 1990s, is among foreign entities that will become part owners of GM when the auto maker returns to the public markets, these people said. A final decision could come within the next couple of days.

Chinese investors who have applied to buy the Crafar family's dairy farmers from receivers say they think the purchase will be allowed by regulators at the Overseas Investment Office, The National Business Review reported. Natural Dairy NZ Holdings Ltd has applied to buy the 80% it does not already own in UBNZ Assets Holdings Ltd as part of the planned purchase of 16 North Island farms owned by the Crafars and put into receivership 12 months ago, when debts topped $200 million. The 8615ha of dairy farms, mostly in the North Island, run about 25,000 dairy cattle.

Chinese Premier Wen Jiabao offered Greece a major vote of confidence on a visit to the debt-ridden European nation, saying China will continue to buy Greek bonds and announcing the creation of a $5 billion fund to help Greek shipping companies buy Chinese ships, The Wall Street Journal reported. The remarks represent some of China's most substantive support for the euro zone amid the region's debt troubles, and reflect the Asian giant's growing willingness to wield its economic clout to obtain wider international influence. Mr.

More Chinese expect property prices to keep rising, a People's Bank of China survey found, illustrating the challenge that policy makers face in reining in the country's real-estate market, The Wall Street Journal reported. The survey of banking depositors, conducted in the third quarter and reported on the central bank's website Sunday, found that 36.6% expect property prices to rise, up from 29.4% in the previous quarter, though down from 41.5% a year earlier.

Regulators, suspecting that banks and trusts are secretly repackaging old loans and moving them off bank balance sheets, are concerned that financial institutions in China may have engaged in the same sort of financial engineering that got Western banks into trouble. On Aug. 10, government overseers acted again, ordering banks to move any off-balance-sheet loans back onto their books and to make provisions to safeguard against a rise in bad loans, according to a copy of the government order given to The New York Times by an industry expert.

China faces the threats of faltering demand for exports, rising wages and the risk of bad loans from record lending after surpassing Japan as the world’s second- biggest economy last quarter, Bloomberg reported. The boost to China’s “national pride” from the second- quarter milestone may not count for much if it fails to boost domestic consumption and reduce its reliance on exports and investment for growth, said Brian Jackson, an emerging-markets strategist at Royal Bank of Canada in Hong Kong.

At last some answers to a major question mark hanging over the Chinese banking sector: Just how much of its lending has gone to local government investment vehicles—and how iffy has that lending been? Because of restrictions on how much local governments can borrow from banks directly, off-balance-sheet funding has become a key means for them to obtain financing. These funds, in turn, have fueled the investment boom that lies behind China's solid economic growth since the global financial crisis, The Wall Street Journal Heard on the Street blog reported.

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.