Spooked by defaults, China banks begin retreat from risk

BEIJING (Reuters) - Some of China's struggling firms are finally getting the reception that regulators have been hoping for -- a cold shoulder from banks in the form of smaller and costlier loans.

Reuters has contacted over 80 companies with elevated debt ratios or problems with overcapacity. Interviews with 15 that agreed to discuss their funding showed that more discriminate lending, long a missing ingredient of China's economic transformation, has become a reality.