China's new yuan-denominated loans in the first eight months reached 8.15 trillion yuan

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According to Google, 8.15 trillion Chinese yuan = 1.1938609 trillion U.S. dollars.

China's banking regulator urges reasonable pace of lending

2009-10-17 13:23 BJT

BEIJING, Oct. 17 (Xinhua) -- China's banking regulator urged a "scientific and reasonable" pace of lending by big banks in the country while warning them to improve risk management, a notice posted Friday on the agency's Website said.

The country's five major banks, the Industrial and Commercial Bank of China, Bank of China, China Construction Bank, Agricultural Bank of China, and Bank of Communications, took 47 percent share of the total bank loans in the country during the first three quarters this year, China Banking Regulatory Commission (CBRC) said in the notice.

The five banks have also maintained a steady credit line of less than 200 billion yuan (29 billion U.S. dollars) in monthly new lending during the third quarter, according to CBRC.

Jiang Dingzhi, CBRC vice chairman, called on those banks to improve risk management over lending so as to ensure the stability of the banking sector.

The agency requires those banks to raise their provision coverage ratio to at least 150 percent within the year. It also puts tighter restrictions in bank lending to businesses in industries with overcapacity problems.

China's new yuan-denominated loans in the first eight months reached 8.15 trillion yuan, 5.04 trillion yuan more than the same period of last year.

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Re: China's new yuan-denominated loans in the first eight months reached 8.15 trillion yuan

and there is this:

October 17,2009

RMB 4 Trillion Stimulus vs RMB 5 Trillion Debts: Looming Local Government Credit Risk Explosion

For the implementation of China's four trillion yuan economic stimulus, the central government requires matching funds by local governments "100%" in place. Local governments already in financial difficulties are finding these requirements especially onerous, but are now being allowed to issue special bonds to come up with the cash. A problem: Will local governments ever be able to repay the five trillion yuan of bonds they have issued?

"The massive issuance of city investment bonds this year looks to trigger risks in the future," says Xu Lin, director of the Finance Department of the National Development and Reform Commission (NDRC). He says that, because of the needs of the economic stimulus plan and the lack of local financing channels, NDRC can only maintain the development of city investment bonds through improving the existing regulatory system.

The current national tax system shorts local governments of funds, and the Budget Law also clearly stipulates that "except as otherwise provided in the law and by the State Council, local governments are prohibited from issuing local government bonds." The city investment bond, also known as "quasi-municipal debt," is a kind of corporate bond and medium-term note issued publicly for local infrastructure or public projects, with the local financing platform as the main issuing body.

Local governments have a strong incentive to use these bonds to plug the four trillion yuan funding gap. Since the Finance Ministry's issue of bonds worth 200 billion yuan on behalf of local governments is clearly insufficient, local governments choose to issue "quasi-municipal debt" relying on "leasing the government's credit." These so-called "municipal bonds" are issued by local governments and their authorized agents, secured by the credit of local governments, and the funds raised are mainly channeled to urban public facilities. This is a mature financing instrument in Western countries with a long history. But in China, there has never been a municipal bond in the real sense. These city investment bonds issued by urban construction investment companies affiliated to government are known as "quasi-municipal debt."

Since the central government's implementation of its stimulus plan last November, four blocks of funds have been issued, of 100 billion, 130 billion, 70 billion and 80 billion yuan, respectively. NDRC plans to issue the fifth central investment this month. 550 billion yuan have already been issued by the central government this year, and local governments and banks are required to invest a corresponding total of 1.18 trillion to back the package. At present, the operation of matching funds from most provincial governments is running smoothly, but the situation is different when it comes to cities and counties due to their financial weakness.

The central government is allowing the proceeds of land sales to be used for investment matching for the first time, but many local officials complain land sales revenues have already been slated for supporting projects, or that income from land sales contributes nothing.

During the first eight months of this year, 64 city investment debts have been issued, totaling 84.55 billion yuan, while over the past four years, from 2005 to the end of 2008, the total amount issued amounted to only 158.5 billion yuan.