As Chinese financial authorities hold their Economic Work Conference, anxiety is higher than we have yet seen, writes the China-specialist, J Capital Research. In this note they highlight imminent danger to the financial system. They argue that China’s usual end-of-year liquidity problems are coming at a time when many in the group of private financial aggregators, like HNA Group and Dalian Wanda, are obtaining emergency cash infusions to forestall defaults. The highlight problems with the concentration of bureaucratic authority, which impairs information flow and may make regulators slower to react. That reaction function will be tested by new policies that could reduce debt securitization by RMB 10 trn or so in 2018 and this could lead to widespread distress. Meantime in the real estate market, JCap observe that properties in central Beijing have posted prices as high as USD 4,000 per square foot, but the market is not transacting. The government wants the market frozen, but locking up money in property has its own negative consequences. Their final major point highlights raft of articles in the Chinese press that betray concern that social security funds are bankrupt and local governments cannot pay for basic services. Part of the reason Beijing and Shanghai have been expelling non-permanent residents is to save on fiscal expenditure and to focus on the residents who offer a higher tax yield. That is bad news for the small cities, say J Cap. This note can be purchased on RSRCHXchange, alternatively contact the provider directly.