Tracking credit growth in China used to be child's play. In January, the central government would set an annual quota for bank loans and the money went out of the door, says Jing Ulrich, chairman of global markets in China for JPMorgan. But that was before the surge of non-bank lending known loosely as 'shadow banking', which has become a crucial source of credit in China that some naysayers have fingered as an accident waiting to happen. Speaking Monday to the Foreign Correspondents Club of China, Jing said that Chinese banks' share of overall financing dropped last year to 58%, or RMB15.6 trillion ($2.5 trillion). Other sources of credit - trust funds, informal clubs, investment products - took up the slack as China's economy staged a liquidity-driven recovery. Chinese property developers (and speculators) were among the biggest beneficiaries, as real-estate prices revived strongly in the fourth quarter, to the point where Jing sees danger signs ahead. "We already have some concerns about overheating," she told the FCCC. Last week, the government announced stricter enforcement of housing-price controls.
Reported by Forbes.com 6 hours ago.
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