Monday, July 20, 2009

China Bank Loan Surges Is A Risk!

On the Edge Financial News. China bank loan surge a risk, warns CBRC

  • China bank loan surge a risk, warns CBRC
    Written by Reuters
    Sunday, 19 July 2009 23:17

    BEIJING: China’s top banking regulator on July 19 warned of the risks from surging bank lending, singling out the dangers of unhealthy growth in the property market.

    “(We) must control the risk of real estate loans,” said Liu Mingkang, the head of the China Banking Regulatory Commission (CBRC), adding that measures must be taken to better evaluate the creditworthiness of borrowers.

    Liu said bank lending had helped stabilise the economy so far
    but made one of his strongest calls yet to banks to guard against taking excessive risks.

    “In the first half of the year, our country’s banking loans expanded rapidly and helped play an important role in stabilising the economy, but the loans growth has led to accumulated risks also increasing,” he was quoted as saying in a statement on the CBRC website (

    His warning comes after June’s lending figures hit 1.53 trillion yuan (RM798 billion), higher than analyst expectations.

    The figure pushed the accumulative first-half new yuan loans by Chinese banks to 7.37 trillian yuan, far exceeding the government’s five trillion yuan minimum target for the entire year.

    The ballooning of loans has led to some concerns about a potential rebound in non-performing loans, though officials say banks remain sound with their leverage ratios well controlled.

    Liu spoke of financial institutions in the banking sector being “not prudent and impulsive” with their lending which had spurred such risks.

    He urged all banking and financial institutions to “strengthen risk management” to optimise their credit structures, abide by capital adequacy ratios and better manage liquidity. — Reuters

Does one solve a problem by creating another possible problem?

Does one solve a bubble by creating another bubble?

They say a picture is worth a thousand words. Let me use the following posting again, Why One Should Not Get Overly Excited Over Singapore GDP Numbers. In it I had hijacked Macro-Man's chart posted in his posting Helicopter Wen?.


Can you say Holy Cow?

Yup, that's how much money was spun by the helicopter Wen!

And this is exactly why many quarters are extremely wary on what's happening in China and many like Professor Pettis, whose site is blocked in China, wasn't impressed by China’s high reserve and GDP growth numbers and of course, many are bemused by the overblown growth hopes for Asia.

And again this blog asks Would China Have A Debt Problem?