International Law

China Sees Record Bank Lending in March

By Stan

I’m a terribly cynical and negative person. In the middle of a credit crisis, the first thing that pops into my dark mind when I see a headline like that is how much of this lending represents reckless or risky loans.

On the other hand, apparently I’m not the only person who sees this as bad news as well as good news (from AFP):

Chinese banks lent a record amount of money in March as they respond to government calls for growth-boosting measures.

New loans from all banks in March totalled an estimated 1.87 trillion yuan ($384.5 billion), the most ever lent in one month, the Shanghai Securities News reported Wednesday, citing an unnamed official at a financial institution.

The figure is significantly higher than other estimates for March lending, which range from 1.3 trillion yuan to 1.6 trillion yuan.

New loans reached 1.62 trillion yuan in January and 1.07 trillion yuan in February, as banks heeded Beijing’s calls to increase lending to help boost growth amid the global financial crisis.

If confirmed, the lending figure for March would bring the new loans extended in the first quarter to 4.6 trillion yuan, close to the five trillion yuan Beijing has set as the minimum banks must lend for the year.

It has so far announced no upper limit for bank credit this year.

However, the lending spree has forced the China Banking Regulatory Commission to pay more attention to risk control, the newspaper cited the official as saying.

The banking regulator has recently asked academics and industry officials to study new documents on credit risk control, the report said, without elaborating.

There have been concerns that Chinese banks risk seeing a surge in bad loans due to their aggressive lending during the economic slowdown to help fund China’s 4-trillion-yuan stimulus plan.

I bet (U.S. Treasury Secretary) Tim Geithner wishes he had that problem.

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Full post as published by China Hearsay on April 08, 2009 (boomark / email).