Local Debt Concern

Commercial banks have disbursed 7.66 trillion yuan ($1.14 billion) to financing vehicles of local governments by the end of June, said the China Banking Regulatory Commission (CBRC). Of this total, about 23 percent are faced with serious default risks due to a lack of qualified borrowers or warrantors, said the commission.

"But these questionable loans may not necessarily turn sour as most of them have eligible collateral or a secondary source of repayment." said CBRC.

As part of the country's effort to lift the economy out of quagmire, Chinese lenders gave out a record 9.6 trillion yuan ($1.4 trillion) of new loans last year, a big chunk of which went to the local financing vehicles.

But worries have been bubbling over the hidden financing vehicles due to their reckless expansion and operational mismanagement. In May, the government even vowed to step up a stringent clampdown on the financing vehicles.

CBRC said it would conduct on-site inspections over the next three months and urge banks to make adequate provisions to prevent possible increases in bad loans.

Golden Profit

Gold producers of China are reaping windfall, basking in the glow of prolonged market euphoria.

China National Gold Group Corp. (CNGGC) said its profits in the first half of this year added up to 1.55 billion yuan ($228.7 million), 1.2 times that of last year as a whole. Its revenues from January to June grew a hefty 98 percent from a year earlier to 27.67 billion yuan ($4.1 billion) and the full-year revenue is expected to reach 50 billion yuan ($7.4 billion), said Sun Zhaoxue, General Manager of CNGGC.

As China's top gold producer, CNGGC controls 30 percent of gold reserve in the country and accounts for more than 20 percent of national output.

In addition, gold firms of the country reported a combined net profit of 7.95 billion yuan ($1.17 billion) in the first five months, up 76.8 percent from one year ago, said the Ministry of Industry and Information Technology.

Risk-wary investors across the country are rushing to board the gold canvas to seek safe haven from brewing inflation and the fickle stock markets. Prices of gold futures at the Shanghai Gold Exchange have gained more than 11 percent in the first half of this year.

With a bright prospect in sight, the company will enhance efforts in gold mining, as well as boosting resource reserves through mergers and acquisitions, said Sun.