Where Did that 7 Trillion Yuan Come From?
07-30 15:39 Caijing
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A close look at China's first-half lending surge shows how the Big Four banks blazed a credit trail that many others followed.
Technical Adjustment
The hot credit market has drawn the attention of central bank officials, some of whom worry about future negative effects.
The central bank announced a one-year government notes program July 8, sending a high-profile call for reining in liquidity.
Nevertheless, China Investment Corp. Chief Economist Ha Jiming told Caijing that "in the short term, policies will not reverse."
For now, most of the loans are going toward medium- to long-term projects, which are currently at an early stage. A sudden tightening of credit rules could generate a large amount of bad debt, officials say. Therefore, any adjustments would be aimed at tightening the review process for future projects.
"Control over credit writing more crucial than reining in the sheer volume," said Zhou Zhongming, bureau chief for the Shandong Banking Regulatory Commission, who said the next step for regulators should be to strengthen management and track the flow of borrowed money. He also said any problems tied to the latest race to issue loans could start to emerge next year.
In mid-June, the China Banking Regulatory Commission issued a notice that called for tightening credit management, saying all commercial banks that write loans should proceed with caution. However, as June's credit statistics indicated, that notice did little to stem the tide.
1 yuan = 14 U.S. cents
List of Main Banking Institutions in China
1. The Central Bank
People’s Bank of China (PBOC)
2. Major State-owned Commercial Banks
Bank of China (BOC)
Agricultural Bank of China (ABC)
Industrial and Commercial Bank of China (ICBC)
China Construction Bank (CCB)
3. Second Tier Commercial and Private Banks (so-called join-stock banks)
Non-exhaustive summary list
Bank of Communications (BoCom)
CITIC Industrial Bank
China Everbright Bank
Hua Xia Bank
China Mingsheng Bank
Guandong Development Bank
Shenzhen Development Bank
China Merchants Bank
Shanghai Pudong Development Bank
Fujian Industrial Bank
4. State Policy Banks
China Development Bank (in transition to become a commercial bank)
Export Import Bank of China
Agricultural Development Bank of China
5. Rural Credit Union and Commercial Banks
6. Village Banks
7. Postal Savings Bank of China
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