FT Reports Central Bank Considering Bailout for Ningbo Developer; Central Bank Condemns Report

A reminder of the stakes.

PBoC in emergency bailout talks for small developer

Local government officials were keen to downplay the fate of the troubled developer, Zhejiang Xingrun Real Estate, which quickly added fuel to markets already jittery after Chaori, the solar cell maker, this month became China's first bond default.

Officials from the government of Fenghua, a town in Eastern China with a population around half a million, the People's Bank of China and China Construction Bank - the main lender to the developer - were on Tuesday thrashing out ways to repay the company's Rmb3.5bn ($566m) of debt.

The company appears to have stopped functioning after its chairman and his son were arrested in November and January for suspected "illegal fundraising" and engaging in usury, according to state media reports.

In a practice that is illegal but has become relatively common in China's burgeoning shadow banking sector, the company took deposits from individuals who were offered annual interest rates of between 18 and 36 per cent.

Although Xingrun's problems appear to stem mostly from mismanagement and alleged illegal activity, the company's demise could be a warning sign of problems to come in China's overheated property sector.

So far the Chinese media are just repeating this story from FT.
外媒：中国央行正紧急讨论救助宁波一违约房企

The PBOC condemns the report: 央行回应救助房企传闻：谴责个别外媒失实报道

ZeroHedge has coverage here.