China's big banks have been selling their bad loans as quickly as possible to clean up their balance sheets in preparation of public listings in the next few years. The problem is while they've dumped HK$1.5 trillion (almost US$200 billion) over the past few years, they have accumulated as much again. The irony is most of these defaulters are state owned enterprises not repaying loans to state owned banks. This constant reshuffling of cards is common in Chinese business. Another reason to never buy shares of a Chinese bank when offered to you.

In other news the SCMP reports on the CCP's latest anti-graft tactic: gossip.

The Central Commission for Discipline Inspection and its Central Organisation Committee gave a rare glimpse into their methods this week, publishing an article on the People's Daily website describing the activities of the five investigation teams set up last July to monitor more than 2,000 provincial officials.

The teams aimed to extract information by befriending local officials and then seeing if they could pick up any intelligence from casual conversations, the report said.

They used the "art of conversation" and learned how to create "a harmonious atmosphere" to lead their new friends into giving tips about official misconduct.

The government plans to set up a 600-member middle-class forum to advise it on public issues and policy initiatives. But the group will not meet regularly, communicating instead through e-mail and an internet chat room.