HNA’s insolvency could test China’s relatively young bankruptcy law.

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Pressure is mounting on companies whose behavior could pose a risk to China’s financial system. HNA Group, the vast Chinese conglomerate that threw tens of billions of dollars at trophy businesses around the world, is nearing the biggest corporate collapse in recent Chinese history, offering a glimpse of how Beijing treats its most powerful entrepreneurs.

HNA’s insolvency is the largest China has seen since the country first began using its bankruptcy law in 2007, according to Michelle Luo, a bankruptcy lawyer at Hui Ye law firm. It will also test the law’s strength — just 76 companies have gone through bankruptcy proceedings in China, Alexandra Stevenson reports for The New York Times.

Xi Jinping, China’s top leader, told a meeting of the country’s senior Communist Party officials late last month that the government must anticipate risks even as it pursues growth. He urged officials to make plans to deal with “gray rhinoceros” events, referring to large and evident problems in the economy that are ignored until they become urgent threats. Chinese media had often referred to HNA as a gray rhino before its decline.

The party has strengthened its hand in private business in recent months and urged entrepreneurs to “identify politically, intellectually and emotionally” with its goals. It has also pledged to prevent what it called the “disorderly expansion of capital,” a reference to the type of lavish spending of borrowed money for which HNA had become known.

Among the party’s recent prominent targets is the Chinese online shopping giant Alibaba Group. In December, the authorities opened an antitrust investigation into the company, which the Chinese billionaire Jack Ma helped found. One month earlier, days before a planned initial public offering of Mr. Ma’s finance giant, Ant Group, regulators stepped in to stop it.

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