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(EMAILWIRE.COM, January 14, 2013 ) San Francisco, CA -- China's bank loans have now fallen to their record low in terms of its share of the funding in the economy. That fact is highlights the growth of alternative financing channels that have prompted warnings about the effects of credit risks.
New yuan loans have dropped 14% in the last month from on a year-to-year comparison, according to the median projection by Bloomberg News survey of over 35 analysts, and ahead of data that is due to be reported by January 15. That would mean that bank lending would have a 55% share of aggregate financing for the 2012 fiscal year, according to numbers from the UBS AG estimates. Those figures date back to 2002.
The decline also underscores a lumbering ability of official loan data to note the true scale of debt in the world's second-largest economy, as borrowers and investors alike turn to less-regulated higher-return shadow-banking products.
The People's Bank of China has made a greater effort when it comes to aggregate financing, and the international Monetary Fund has noted a growth in non-bank credit is sure to pose “new challenges to financial stability.”
“China’s economic performance in 2013 will be significantly affected by how seriously Chinese regulators are going to treat non-bank financing,” said Shi Lei, a Beijing- based analyst with broker Founder Securities Co., who has provided research advice to China’s securities regulator. While a hands-off approach will help the economy, a crackdown “would be really bad for growth.”
The PBOC numbers are within the data that will come through in coming days, and will show whether economic rebound that started in September has gained or lost momentum in recent months. Trade figures are due in the next few days and may note exports rising faster, while the January 11 report may indicated inflation gaining speed in recent months.
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Source: EmailWire.com
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