China Vice Premier Liu He vows zero tolerance for misconduct after recent bond defaults

BEIJING (Reuters) - China will show "zero tolerance" for misconduct following a recent string of bond defaults, a meeting of the Financial Stability and Development Committee chaired by vice premier Liu He said.

Fraudulent issuance, disclosure of false information , malicious transfer of assets, and misappropriation of issuance funds will be strictly investigated, said the meeting, according to an account posted on a government website.

Several high-profile defaults recently by Chinese state firms, including Yongcheng Coal & Electricity Holding Group and Huachen Auto Group Holdings Co have sent shockwaves across China's corporate bond market.

Chinese regulators have launched probes into the two state borrowers and their bond underwriters.

The bond defaults dented investor confidence and pushed up funding costs for many corporate borrowers, adding to pressures on China's nascent economic recovery.

Various "debt evasion" behaviors will be severely punished, said the meeting. The bond defaults were a result of cyclical, institutional and behavioral factors, it added.

Prevention and warning systems will be strengthened to forestall systemic risks, and liquidity should be kept reasonably ample, the meeting said.

(Reporting by Gabriel Crossley and Samuel Shen; editing by Richard Pullin and Lincoln Feast.)