Join        Login             Stock Quote

China Loan Growth Declines Sharply: This Can't Be Good

 February 14, 2012 11:39 AM

Economists are observing a sharp slowdown in China bank loans. Chinese bank lending fell 28% YoY in January, suggesting Beijing is reluctant to open the credit valves too quickly for fear of reigniting inflation. Chinese banks typically ramp up lending at the beginning of the year to avoid losing quotas issued by regulators and the effects of changes in monetary policy, but the December-January change was the lowest increase since 2007.

To us, this is more evidence that China's economy, now the world's second largest, is slowing as turmoil in Euro zone countries and weakness in the United States hurts demand for Chinese exports, while China is itself a key driver of the Asian and Japan economies.

The weak January numbers came despite reports by the FT that the government is telling the banks to rollover their loans to local governments to give them more time to repay massive debts from stimulus spending after the 2008 financial crisis. Last year, China's National Audit Office put the debt held by local governments at 10.7 trillion yuan ($1.7 trillion) at the end of 2010 -- or about 27% of China's 2010 gross domestic product (GDP). The huge amount of money involved this time is unsettling investors. The government belatedly gave permission to four of its most developed cities and provinces to directly issue bonds after a long ban, to give cash-strapped local governments an alternative funding channel to real estate development through property subsidiaries. 
iOnTheMarket Premium


Comments Closed

rss feed

Latest Stories

article imageEmerging-Markets Stocks Took The Lead Last Week

Emerging-markets equities enjoyed a solid rise last week among the major asset classes, based on a set of read on...

article imageDoes Your Latest Investment Pass This Test?

On Wednesday, I sounded the alarm about the problems looming for some consumer staples stocks. In short, read on...

article imageIs The Slump In US Manufacturing Easing?

Yesterday’s November survey data from the Philadelphia Fed hints at the possibility that a stronger trend read on...

article imageMarket Potentially Facing Near Term Technical Headwinds

After the S&P 500 Index pullback on Thursday and Friday last week, the market's advance on Monday and read on...

Popular Articles

Daily Sector Scan
Partner Center

Related Articles:

Red Hat Inc (NYSE:RHT): A Top Rebound Story For 2014
More Articles on: China

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.