LINE

    Text:AAAPrint
    Economy

    Credit risks curbed in high-risk sectors

    1
    2017-01-13 08:25China Daily Editor: Feng Shuang ECNS App Download

    Credit risks in industries with excess capacity has been digested better than expected by China's major lenders, creating a favorable condition for policymakers to contain risks in the financial system, analysts said.

    Bank loan growth to the higher-risk manufacturing, mining and trade finance sectors in China has essentially stalled. And, listed Chinese banks have digested around 10 percent nonperforming loans in the three sectors, according to a recent report by Morgan Stanley.

    "The economic structural adjustment and the digestion of bad loans in the industries with overcapacity are better than the market expectation, which has laid a good ground for the regulators to manage risks in the financial markets," said Richard Xu, an equity analyst at Morgan Stanley Asia Ltd.

    But, new risks emerge as credit growth has shifted away from the old industries while infrastructure spending, capital markets and government and household borrowing are becoming the new drivers of loan growth in the country.

    In particular, borrowing in the capital markets has contributed to China's rising debt since 2012, the report by Morgan Stanley found.

    It estimates that credit in Chinese capital markets rose to 15 percent of GDP by the end of 2015 and increased by 5 trillion yuan ($724 billion) in that year, contributing to nearly one-third of the total leverage increase in the country.

    The rapid growth in leverage in the capital markets and the recent sharp fluctuations in the bond and commodities markets have caught the regulators' attention. The top leadership has decided that maintaining financial market stability is one of its priorities in 2017.

    Xu noted that the structure and pace of China's economic growth has changed to a level that will still generate reasonable credit and capital demand with less deflationary pressure.

    "There is no need for monetary policymakers to maintain a too accommodative credit environment and to keep the interest rates too low," he said.

    "The task for the regulators is to ensure the money flows into the real economy rather than building up leverage in the financial markets for speculative purposes. We have seen progress of better coordination among various financial regulatory agencies to curb financial risks," he added.

    Zhao Yang, chief China economist at Nomura Securities, said that the possibility of high-profile monetary easing such as interest rate or reserve requirement ratio cut is limited as the authorities have become more focused on containing financial risks.

    "We believe monetary easing is more likely to be implemented in a low-profile and targeted way such as via credit supply by policy banks," he said in a research note.

      

    Related news

    MorePhoto

    Most popular in 24h

    MoreTop news

    MoreVideo

    News
    Politics
    Business
    Society
    Culture
    Military
    Sci-tech
    Entertainment
    Sports
    Odd
    Features
    Biz
    Economy
    Travel
    Travel News
    Travel Types
    Events
    Food
    Hotel
    Bar & Club
    Architecture
    Gallery
    Photo
    CNS Photo
    Video
    Video
    Learning Chinese
    Learn About China
    Social Chinese
    Business Chinese
    Buzz Words
    Bilingual
    Resources
    ECNS Wire
    Special Coverage
    Infographics
    Voices
    LINE
    Back to top Links | About Us | Jobs | Contact Us | Privacy Policy
    Copyright ©1999-2018 Chinanews.com. All rights reserved.
    Reproduction in whole or in part without permission is prohibited.
    主站蜘蛛池模板: 遂宁市| 达尔| 慈溪市| 噶尔县| 海阳市| 龙泉市| 松原市| 株洲县| 镇康县| 喀喇| 体育| 马公市| 江城| 吴桥县| 临江市| 柳河县| 仪征市| 额尔古纳市| 贞丰县| 洱源县| 新宁县| 永泰县| 嘉义市| 云安县| 龙井市| 体育| 醴陵市| 林西县| 荆州市| 石景山区| 新野县| 伊宁市| 寿光市| 和政县| 海安县| 商丘市| 广州市| 大邑县| 宜章县| 五指山市| 西吉县|