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China's Central Bank: "Everyone, Please Don't Worry"

• https://www.zerohedge.com

Many unhappy returns. Thirty years ago, British ambassador Sir Alan Donald cabled home his classified report on the bloody goings-on in Tiananmen Square: "Students linked arms but were mown down. Armored personnel carriers then ran over the bodies time and time again to make, 'pie', and remains collected by bulldozer, incinerated and then hosed down drains. . ."

Unsurprisingly, the Xi Jinping-led government has little interest in commemorating the event, or in allowing others to pause and remember. Domestic social media platforms have "barred users from changing their profile photos and other information," Bloomberg says, while financial data company Refinitiv has blocked all Tiananmen-related stories from its Eikon terminals, after the Cyberspace Administration of China "threatened to suspend the company's service," according to Reuters.

While Refinitiv may suffer a reputational knock in the West for this evident kowtow, its social credit score looks poised for an upgrade.       

If only the recent trouble in China's banking system could be so easily suppressed. Following the government's takeover of distressed Baoshang Bank Co., the People's Bank of China tried to calm the situation by assuring investors that no further such interventions were in the cards: "Everyone," says a message on the PBOC website: "please don't worry. At present we don't have this plan." But Bloomberg reports today that a pair of smaller institutions, Guilin Bank Co., Ltd. and Jincheng Bank Co., Ltd., have delayed plans to sell RMB 1 billion ($140 million) in tier-2 bond sales following the Baoshang news.  

Over the weekend, Bank of Jinzhou, which holds $113 billion and $53 billion of assets and deposits, respectively, saw its auditor Ernst & Young Hua Ming LLP resign due to "indications that some loans to institutional customers weren't used in ways consistent with the purposes stated in documents," per Bloomberg. In response, the bank's 5.5% dollar-pay perpetual bonds fell below 65 from 81 a week ago, for a 19.2% yield-to-call.

In a report on May 28, Anne Stevenson-Yang, co-founder of J Capital Research explains that the emergence of systemic balance-sheet risk is inevitable in China's command economy:

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