China's capital controls sowing risks in its dollar bonds

Hong Kong

CHINA'S central bank can pat itself on the back for stemming outflows of capital that once spooked investors around the world. But hidden costs of the efforts involved are slowly materialising.

One of the newest is in the swelling market for dollar bonds sold by Chinese issuers. While still small relative to other financial risks in the world's No 2 economy, it helps to illustrate some of the weaknesses of China's patchwork of market incentives and government controls.