China Banking and Insurance Regulatory Commission vice Chairman claims debt-cooling measures «marvelous achievement».
Whipping up credit for the economy after a three-year debt-cooling drive by the Government, the Chinese regulator is keen to encourage the slowing economy.
The China Banking and Insurance Regulatory Commission (CBRC) recently said it had successfully achieved its target debt levels and is now encouraging banks to inject liquidity back into the economy, whilst of course keeping an eye out for riskier lending. Fresh loans hit record levels in January despite 2018 being a record year for defaults.
‹Barbaric› Growth of Shadow Banking
«After two years of work, various financial disorders have been effectively curbed,» Wang Zhaoxing, vice chairman of China Banking and Insurance Regulatory Commission (CBIRC), told media in Beijing. Then, taking an obvious swipe at international detractors, he added that «this breaks overseas predictions that the ‹barbaric› growth of shadow banking and the financial overheating of real estate might lead to systemic financial risks and crises in China.»
Those with their ear close to the ground agree with the regulator, claiming that in the last six months, liquidity had been the tightest it has since the global financial crisis.
Mass of Millionaires
A Hong Kong-based China banker says the drive to reform credit had a real impact on the economy, with small and medium-sized entrepreneurs – China's emerging mass of millionaires – the worst hit. Policy makers are now keen to coax the economy back to growth mode. «Our leverage level is basically stable. This is a marvelous achievement,» said Zhou Liang, another CBIRC vice chairman.
However, the global view is more tempered with several analysts pointing that the lack of any structural reform to China's capital system implies that last year's record number of corporate defaults may not be the last.
