China’s `Underground’ Loans Top $1.5 Trillion, Wen Wei Po Says
By Patricia Kuo
Aug. 3 (Bloomberg) -- So-called “underground’’ lending in China exceeds 10 trillion yuan ($1.5 trillion), the Wen Wei Po newspaper reported, citing lenders and market watchers it didn’t identify.
Funding made available by unauthorized lenders including pawn shops and auction firms is thriving as banks tighten credit after a series of interest rate and reserve ratio increases, the Chinese-language newspaper said. Some such loans carry interest rates higher than 5 percent a month, it said.
Smaller companies in the southern Pearl River Delta need an estimated 2 trillion yuan of capital, according to the report.
The central bank this year ordered lenders to set aside a record amount in reserves to tame rising consumer prices, after increasing interest rates six times in 2007. Inflation climbed to 7.9 percent in the first half of this year, from 4.8 percent for all of 2007, government figures show.
1 comment:
China’s `Underground’ Loans Top $1.5 Trillion, Wen Wei Po Says
By Patricia Kuo
Aug. 3 (Bloomberg) -- So-called “underground’’ lending in China exceeds 10 trillion yuan ($1.5 trillion), the Wen Wei Po newspaper reported, citing lenders and market watchers it didn’t identify.
Funding made available by unauthorized lenders including pawn shops and auction firms is thriving as banks tighten credit after a series of interest rate and reserve ratio increases, the Chinese-language newspaper said. Some such loans carry interest rates higher than 5 percent a month, it said.
Smaller companies in the southern Pearl River Delta need an estimated 2 trillion yuan of capital, according to the report.
The central bank this year ordered lenders to set aside a record amount in reserves to tame rising consumer prices, after increasing interest rates six times in 2007. Inflation climbed to 7.9 percent in the first half of this year, from 4.8 percent for all of 2007, government figures show.
Post a Comment