Soldiers no longer send messages by coded semaphore. The practice lives on in the pronouncements of central bankers. In China, they have shown how much they care about recurrent western worries of a bank debt meltdown: they don’t. The central bank may cut minimum reserve requirements for some banks after five previous cuts, to support smaller businesses as the economy slows.
This sounded reckless on a day when the National Audit Office warned that some banks in Henan have non-performing loans equal to two-fifths of the total. The truth lurks between this figure and improbably low NPLs of 1.89 per cent for the bank sector, as quoted in official data.
That number would be low even after years of forced deleveraging. Higher corporate borrowing costs and slowing growth have been tough on smaller companies. The government pushed for banks to step in with a mandate to increase loans to smaller companies by a third.