China’s finance ministry failed to sell out a bond auction on Wednesday for the first time in nearly a year, raising concerns about whether the market can absorb the huge wave of government paper coming this year.

The failure also raised the spectre of a midyear cash crunch like the one that roiled China’s money market in late June 2013, briefly sending short-term cash rates above 30 per cent. Banks traditionally hoard cash at the end of each quarter in order to prettify their quarterly financial statements and meet regulatory checks.

But market participants say they do not expect a major squeeze this time around. In an attempt to support the slowing economy, China's central bank has cut the ratio of deposits that banks must hold in reserve by 1.5 percentage points since February, pumping nearly Rmb2tn ($326bn) into the banking system.