China seen bailing out biggest bad-debt manager while teaching investors a 'hard' lesson as contagion effects linger | South China Morning Post

Chinese economic policymakers are caught between a rock and a hard place as they try to piece together a rescue plan for embattled bad-asset manager China Huarong Asset Management. On the one hand, they want to adhere to the market-based principle that investors should bear part of the burden. But on the other, policymakers are trying to avoid saddling those investors with a cost that would hurt future investments in China. Because of Huarong's many connections to other financial institutions, analysts agree that the situation needs to be resolved, and soon, to avoid significant contagion effects on the domestic and…