Mortgaging the Future? Article on China’s Banking Sector
January 19th, 2010
It was bank lending that funded China’s economic stimulus. In 2009, China’s banks lent out more than CNY9.5trn. That’s more than double what they lent in 2008, and only slightly less than a third of GDP.
In the short term, the benefits of that lending are clear in China’s rapid recovery from the impact of the global crisis. In the longer term, the costs in terms of inflation, bad loans, and a stimulus which tilted the economy further toward a reliance on investment as a driver of growth, could be enormous.
In an article in a recent edition of Business Forum China, I take a look at some of those costs. You can read the article here.