Non-Performing Loan (NPL) Ratio Drops in China
I have been predicting that come the end of the 2008 games bad loans will surface like oil on water. I still think so.
But for now, China has seen improvement in the ration of bad loans to good.
In the period from January to June the NPL dropped 1.1% to 7.5%.
Now, before anyone gets naked and starts dancing on a table, the amount of bad loans totaled 1.28 trillion yuan! That’s a ‘T.’ It comes to about $160 billion.
That means $160 billion loaned out does not come back!! who covers those bad loans? The people who do pay their back.
Of the bad loans 1.055 trillion were from state-owned commercial banks or 9.5% of all loans.
The number of criminal acts dropped 89 cases to 480 in the first six months of this year.
Okay, I know China is big and there are a lot of people and companies borrowing a lot of money. But, it still seems to me that $160 billion in bad loans is an awful awful lot of money.
What happens when the bubble really bursts in China? Just how large will that figure grow?
What do you think?
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