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In an effort to boost growth amid the nation’s economic slowdown, the Chinese government allowed banks to lower borrowing costs back in July. But the nation’s biggest banks worried about the impact this would have on their profits.
An exclusive Bloomberg report says the banks are resisting government pressure to offer loans at 30 per cent less than the benchmark rates.
Instead, the banks are offering discounts of 10 per cent of the benchmark rate for their best clients.
Local Chinese governments, through financial vehicles (LGFV) are looking to raise funds in an effort to finance over 800 billion yuan in infrastructure projects. The resistance on the part of Chinese banks could impact the nation’s plans to boost growth through spending.