Clampdown on excessive lending in China


  • Business
  • Thursday, 12 Feb 2004

BEIJING: Chinese Premier Wen Jiabao has ordered a clampdown on excessive lending, the strongest call yet to tackle a problem that could undermine the country's economic growth and complicate key reforms of banks and state firms. 

The China Daily quoted Chen as saying at an annual meeting of senior financial officials that began on Tuesday that growth in 2003 was “excessively fast-paced” and should be scaled back this year. 

According to Wen, the heated lending poses risks to the health of the financial system, which Beijing is trying to reform with measures so far that include a US$45bil bailout of two major state-banks. 

Using strong language to back up his call for a clampdown on credit, Wen described many industrial projects as “excessive”, “unhealthy” and “unreasonable”. 

The remarks showed that worries over reckless lending that could create industrial overcapacity and possibly lead to bad loans and mass layoffs have reached the highest ranks of power. 

Earlier this week, China’s banking watchdog ordered a probe into lending to red-hot industries such as steel, cement and property. 

Fixed asset investment – covering spending on things like roads, power plants and factories – jumped 26% in 2003 over the previous year, hitting 5.5 trillion yuan (US$664bil), the report said. That was about half of China’s gross domestic product (GDP) and accounted for 46% of GDP growth, which hit an annual pace of 9.1%, it said. – Reuters

For more foreign business news click here

For Another perspective from the China Daily, a partner of Asia News Network, click here

 

 

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 0
Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!
   

Next In Business News

Global shares slide as interest-rate risk rises and geopolitics heat up
US CBP's modification of forced labour finding on SDP is credit positive: Moody’s
Thai baht faces worst day in 23 years as strong dollar pressures Asia FX
Dell to cut about 6,650 jobs, battered by plunging PC sales
Indonesia to suspend some palm oil export permits - officials
Oil prices edge higher as IEA's Birol talks up China demand outlook
Indonesia 2022 GDP growth races to 9-year high on resource boom
Foreign investors' latest targets in China
Asia shares skid, dollar gains as yields spike
CIMB cautious on net interest margin for this year

Others Also Read