Banker Warns of China Bubble

[Stepbrow]

The chairman of China Merchants Bank calls for an urgent tightening of the money policy. If not the current money policy can lead to a buble in the Stock Market and Housing Market. http://www.cnn.com/2009/BUSINESS/10/21/chi...e.ft/index.html

[GDBILL]

The chairman of China Merchants Bank calls for an urgent tightening of the money policy. If not the current money policy can lead to a buble in the Stock Market and Housing Market. http://www.cnn.com/2009/BUSINESS/10/21/chi...e.ft/index.html

 

The People's Bank of CHina has also made comments recently about how banks should practice more careful lending so this may indicate a gradual tightening. Still, the government is usually reluctant to take any measures that could be viewed as anti-stimulus prior to Chinese New Year.

 

Many bankers these days are already talking about how government relaxation of credit standards will increase their bad debt ratio, but since the government controls virtually every Chinese bank and is known for using access to credit as a political tool, all the banks can do is continue to feed the money frenzy.

[Tony_onrock]

Most banks have used up their lending quota for the year. Lets wait and see how they will do it next year. The problem is not too much lending, the problem is where the money went. Infrustructure can only create so many jobs and SOEs are pushing the money into real estate and the stock market. The small and medium sized companies, usu. privately owned did not get much help from the banks. They create the most jobs. The real solution is not tightening the credit but direct the money to where it is really needed and where it will help the economy the most.