Really, does anyone think China needs more leverage? A state financial leads the charge for junk – oh, I’m sorry, innovative – bonds:

China should introduce “junk” bonds to provide smaller private companies with new funding channels as the country develops its debt capital market, a senior Chinese financial official has suggested.

“It may be a little bit radical, but I think we should promote junk bonds in China,” Guo Shuqing, chairman of state controlled China Construction Bank, the country’s secondlargest lender, told the Financial Times. “But we would probably use a more appropriate name, like ‘innovative’ bonds or ‘high-yielding’ bonds.”

Most of the liquidity over there at present comes from bank lending, and it’s not like anyone has had any concerns about that recently, so we’re sure no harm can come from letting the bond market get in on the fun as well. Next up, the trash-trawlers will be slicing the stuff on their bikes into literal tranches and selling it to banks who will repackage it as lucrative investments in Chinese commodities, and we wish them well in this endeavor.