How times change in China. Or maybe not. This year the People’s Bank of China replaced its monthly loan quota system with a new procedure — its Macro Prudential Assessment to monitor credit growth.
The change comes at a time when once again the flow of total credit is being ratcheted up, both from the banks and the non-banks in an effort to support economic expansion.
Between the fourth quarter of 2008 and the end of the third quarter of last year, non-financial sector debt swelled 279 per cent and now amounts to 249 per cent of gross domestic product, data from the Bank for International Settlements show. Those numbers do not capture the jump in credit in recent months. China’s banks are meant to do their national service in a variety of ways — and never mind their obligations to minority shareholders.