Fitch says slower credit rise premature

08:15, December 06, 2010      

Email | Print | Subscribe | Comments | Forum 

China's credit growth this year has not slowed materially from the rapid pace in 2009 despite headline data pointing to a slowdown, Fitch Ratings said in a report yesterday.

The rating agency said that Chinese banks have been off-loading trillions of yuan in loans this year by artificially reducing their holdings of discounted bills and by re-packaging the loans into investment products for sale to investors.

The report came on the same day that China said it would change to a "prudent" monetary policy in 2011 from a "relatively easing" stance.

"Talk of a substantial slowdown in credit growth in China is premature, but understandable given the visible drop in official figures on net new loans," said Charlene Chu, head of Fitch's financial institution ratings in China. "However, in reality lending has not moderated, it has been diverted into other channels."

According to the report, the balance of Chinese banks' discounted bills was understated by as much as 1.65 trillion yuan (US$250 billion) at end of the third quarter.

A discounted bill is an accepted draft against which a loan is made and the interest is deducted immediately. Through the action, bill holders can acquire cash before its maturity date at lower rate. It could be a channel for companies to get capital while bypassing the loan quota.

Banks held more than 2.5 trillion yuan (US$375 billion) in credit not reflected in their balance sheets in wealth management products at the end of November.

"Adjusting for these factors, the amount of new credit extended through the end of the third quarter was on par with the 9.3 trillion yuan extended in the same period a year ago," Chu said. "Credit conditions remain loose, which explains why inflation and property prices stay stubbornly high."

Source: Shanghai Daily

(Editor:李佳)

  • Do you have anything to say?

双语词典
dictionary

  
Special Coverage
  • Premier Wen Jiabao visits Hungary, Britain, Germany
  • From drought to floods
Major headlines
Editor's Pick
  • U.S. President Barack Obama (4th L, front) shakes hands with outgoing Chairman of the Joint Chiefs of Staff Admiral Mike Mullen (1st R, front) as Vice President Joe Biden (3rd L, front), Secretary of Defense Leon Panetta (2nd L, front), and Army General Martin Dempsey (1st L, front) look on during the Chairman of the Joint Chief of Staff Change of Responsibility Ceremony at Joint Base Myer-Henderson Hall in Arlington, the United States, Sept. 30, 2011. Army General Martin Dempsey succeeded Mike Mullen to become the 18th Chairman of the Joint Chief of Staff on Friday. (Xinhua/Zhang Jun)
  • Chinese national flag guards escort the flag across the Chang'an Avenue in Beijing, capital of China, Oct. 1, 2011. More than 120,000 people gathered at the Tian'anmen Square to watch the national flag raising ceremony at dawn on Oct. 1, in celebration of the 62th anniversary of the founding of the People's Republic of China. (Xinhua/Luo Xiaoguang)
  • Pedestrians walk along the barrier set by police on Wall Street in New York, the United States, Sept. 30, 2011. Police set up the fences to keep away the demonstrators of the Occupy Wall Street campaign. (Xinhua/Shen Hong)
  • Chinese Navy soldiers hold an evening party marking the upcoming 62nd National Day aboard Chinese Navy hospital ship "Peace Ark" in the Pacific on Sept. 28, 2011. The Chinese National Day falls on Oct. 1. (Xinhua/Zha Chunming)
  • Photo taken on Sept. 30, 2011 shows the crowd at the plaza of Beijing Railway Station in Beijing, capital of China. The railway transportation witnessed a travel peak with the approach of the seven-day National Day holidays on Friday. (Xinhua)
  • A man wearing high-heel shoes takes part in the 3rd annual Walk a Mile in Her Shoes, an event when men literally walk in women's shoes to raise awareness about ending violence against women, at Yonge-Dundas Square in Toronto, Canada, Sept. 29, 2011. (Xinhua/Zou Zheng)
Hot Forum Discussion