For the second time in less than five weeks, China’s central bank has moved to limit lending to consumers and businesses in a move aimed at forestalling inflation.
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Tighter Curbs on Lending in China
Tighter Curbs on Lending in China
1 Response for “Tighter Curbs on Lending in China”
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I think this is very good. It could prevent bubbles from happening as a result from last year’s aggressive expansion of credit and the chinees peoble buy cars apartments and other big-ticket items.
China passed the United States last year to become the world’s largest car market by number of vehicles sold. Car sales in January were more than double the level of a year earlier.
Families, real estate developers and industrial companies have all been borrowing heavily and have started paying more for everything from food to apartments. Last month apartment prices surged and the pace of wholesale inflation doubled.
Chinese families have the cash to buy cars now partly because they still have extremely high savings rates by international standards and partly because the state-controlled banking sector went on a lending spree over the last year at the government’s request.
China’s banks largely avoided investing in the mortgage-backed securities, credit-default swaps and other esoteric financial instruments that have caused tremendous damage to the balance sheets of Western banks in the last two years, leaving them less able or less willing to lend.
China had an import above 80%, so no I dont think this will slow down anything. No reason that western stocks should fall. Maybe they should raise because of a curency weakness.