October 24, 2013
Five of China’s biggest banks have tripled the size
of debt forgiveness to the country’s enterprises in the first six months
of the year. The world’s biggest foreign lender is now seeking to avoid
a wave of domestic defaults.
The world’s most profitable lender, Industrial & Commercial
Bank of China Ltd, together with its four biggest domestic
rivals, wrote down a total of 22.1 billion yuan ($3.65 billion)
of debt, a threefold increase on the 7.65 billion yuan last year,
Bloomberg reports.
The move came as a part of China’s overall initiative to make the
banking buffers more crisis-proof. Earlier in April the China
Banking Regulatory Commission urged banks to set aside more
funds, write off bad loans, as well as cut dividend payments in
order to be ready for domestic defaults.
Despite the latest data showed the country’s GDP rebounded to 7.8
percent in the third quarter, worries about the slowdown persist.
Officially, growth will slow this year to 7.6 percent, its lowest
since 1999.
On top of that, China’s debt-to-GDP ratio – which doesn’t take
into account central government and financial debt –
ballooned to 207 percent, with credit growth
continuing to outpace productivity gains, Bloomberg cites Mike
Werner, an analyst at Sanford C. Bernstein & Co. in Hong
Kong, as saying. This growing debt overhang is making investors
increasingly worried about the portfolio quality of China’s
bank.
Russian experts believe that it is Chinese quasi-state
corporations involved in infrastructure projects that hold most
of the bad debts. Since 2006 Chinese banks have lent massively to
unprofitable corporations, where the state held a large stake. As
a result, since 2010 such firms have started to increasingly
complain they can’t pay the debts they took on earlier.
“The talk must be of the debts of quasi-state corporations
that work with infrastructure projects of municipal governments.
…
Nobody knows the amount of these debts, but it’s really
huge,”
Sergey Ulatov, an economist from World Bank’s office
in Moscow told Russia’s Gazeta.ru.
Nobody wants to have these companies bankrupt, and “these
quasi-state companies receive the support of the central
government through the banking sector,” Ulatov said.
[SIDEBAR: China is the model for the system which is the Federal Reserve System (Fed) and all monetary systems. So the USA as a sovereign nation, liberty to manufacture our own digital keystrokes of electronic units, BUT of course~ are operating in the same century as China, isn't this true?]!!
The PERVERSE 'Game' called Money ~digital keystrokes of electronic units isn't gold-silver-metal or other than what it is: virtual. So when not transparent to some that get to sell the FRAUD to others' the fraud is fraud.
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