ChiComs play hardball on Deriviatives...heavy stuff

http://www.reuters.com/article/fundsFundsNews/idUSPEK36146520090831

BEIJING, Aug 31 (Reuters) - A weekend report that Chinese state-owned companies will be allowed to default on commodity derivative contracts provoked anger and dismay among investment banks on Monday as they feared a damaging precedent.

China's SOE regulator, the State-owned Assets Supervision and Administration Commission (SASAC), has told six foreign banks that SOEs reserved the right to default on contracts, Caijing magazine quoted an unnamed industry source as saying in an article published on Saturday. [ID:nLT454907]

A SASAC media official said he was waiting for the "relevant department's" official comment before he can clarify to media.

The report, the hot topic among bankers from Shanghai to Singapore on Monday, deals another blow to investment banks hoping to sell more derivatives hedges in China, the world's fastest-expanding major economy and top commodities consumer.

"If we were among the banks receiving that letter, we would be very angry. But now the key is to find out more details on the letter: In whose name the letter was issued, government or corporate? And under what reasons for possible defaults?" said a Singapore-based marketing executive with a foreign bank

Basically, the Chicoms have made it offical policy that if industries begin collapsing due to overexposure to credit risks, the Chicom government will not intervene to save that business or industry.

Basically, there will be no AIG, GM, Citi type of TARP program to save a failed industry

Duo-shao kuaii ren min bi..?