Evergreen dispute shows that regulators need to step up

Shanghai

A DISPUTE between investors and the underwriter of a bond issued by Evergreen Industries is showing up regulatory failings that need fixing if China is to sustain newly robust inflows of foreign capital into local bonds.

As China's economy slows and its currency weakens under pressure from domestic capital flight, policymakers have opened up the country's corporate bond markets to foreign investors to help keep credit flowing.

Foreign holdings of onshore Chinese…