fitch-expresses-concern-about-chinas-loan-cascade

Fitch expresses concern about China's loan cascade

The ratings agency points to early warning signs that indicate asset quality is deteriorating.

This year, China's banks have opened the floodgates of credit between January and the end of April, $757 billion worth of new loans were dished out, equivalent to 17% of the GDP in 2008. As such, China's banks are enjoying a rate of growth that their Western peers would kill for. The increase in lending is the government's doing, since it has given banks the task of financing the infrastructure spending that forms a large part of China's stimulus package.

Looking to the medium- to long-term, however, analysts are beginning to air concerns about what effect such a rapid increase in lending could have on the quality of the banks' loan portfolios.

A report released...

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