China’s surging industrial loans aren’t going to its factories

The credit growth was inflated by lending to local government-related entities and financial speculation. — Bloomberg

SHANGHAI: As China’s industrial capacity emerged as a key trade issue, a surge in Chinese bank loans to the sector has often been cited as evidence that Beijing is engaging in a renewed manufacturing push that could flood global markets with cheap goods.

But an examination of those loans by researchers at Rhodium Group showed a significant amount of the money didn’t go into manufacturing at all.