> Given that the major lenders and banks are state-owned , this essentially means that the government bears the loss through these institutions (what else can happen anyway??) .
All major banks ( 'too big to fail' ) are state owned. The only difference between china and the US is that china's state also directly runs the government whereas our state hires out the running of the government to popular clowns. It's essentially the difference between owner operated business vs employee run business. But fundamentally, it's the same thing.
> To address these challenges, the Chinese government has enforced exit bans and placed these individuals under strict supervision. They are often required to return these funds to China, potentially under threat of reduced prison sentences. This sounds not right... but yeah... it is China.
What is so special about china here? 'Exit bans' exist everywhere. If you commit serious financial crime and are deemed a flight-risk, your passport gets seized and you are banned from leaving the country. This happens in every country but for some reason when china does it, it's deemed 'special'. And getting a reduced sentence for cooperating with the government is the norm everywhere. If 4 people commit a crime, it's basic strategy of the prosecutor to offer 1 of the criminals immunity or reduced sentence to testify against everyone else. Once again, what's so special about china? It's amazing that basic standard legal process is consider special just because china does.
> A full government bailout, in the Western sense, does not appear to be on the table.
There is a full government bailout or not. Nothing 'western' about it as if there is a common 'western' strategy about anything. Governments all over the world do full bailouts, controlled or strategic defaults or stay out of the issue depending on the severity and systemic importance of the situation.