Update | Chinese banks hand out record HK$3 trillion of loans in bid to bolster mainland’s slowing economy
Lending spree likely to help economy, but may impede China’s efforts to reduce debt levels, economists say
Chinese banks handed out a record amount of new loans last month to help China’s slowing economy, central bank data showed on Tuesday.
The 2.51 trillion yuan (HK$3 trillion) in loans in January was almost triple the level of the previous month.
READ MORE: China’s commercial banks face HK$1.45 trillion in ‘non-performing loans’: bad debts rise to highest level since 2009
It also marked a hefty rise from the previous record of 1.89 trillion yuan in March 2009 when China was in the midst of a financial crisis and rolling out a massive stimulus package.
The unprecedented amount of new credit from banks in a single month comes as growth in the world’s second largest economy is rapidly slowing. China’s economy grew at its slowest rate in a quarter of a century last year.
Watch: China’s economic growth slowest in 25 years
“... rapid credit expansion in the Chinese banking system will result in significant credit losses that will require the recapitalisation of Chinese banks and materially pressure the Chinese currency ...”
