Runaway Credit Problem in China
Submitted by Bill Belew on Wednesday, 25 October 2006No Comment
Somebody agrees with me.
The chairman of the China Banking Regulatory Commissions is calling for Chinese banks to take effective measuers to prevent a further increas in non-performing loans.
Chinese banks have provided 10.9 trillion yuan ($1.3 trillion) in medium and long term loans as of Sept. this year – up more than 21% over last year.
Fixed asset investments hit 7.9 trillion yuan ($1 trillion) up 27% over last year.
The biggest problem seems to be two-fold. Credit fraud AND bank employees not doing due diligence on credit application evaluations.
That’s an awful lot of money…and when one too many people/companies start defaulting…it will be one serious snowball at the bottom of the hill.
What do you think?
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