Last week we highlighted how Chinese loan growth had already hit the government’s full year target for 2010, in just six months. Basically, banks and trusts are working together to shift loan assets off of balance sheets by packaging them into ‘wealth management products’ and selling them to investors.
Fitch is sounding the alarm as well. Via Charles de Trenck:
Fitch this week was saying “While the credit environment is less frenzied than in H109, Fitch Ratings cautions that lending has not slowed nearly as much as official data suggests, due to the increasing amount of credit being shifted off of Chinese banks’ balance sheets via informal securitisation (ie the re‐packaging of loans into investments products for sale to investors).
Witness the explosion since Q4 2009:
We said it last week, but we’ll say it again — Watch this space in 2010. This is the weak spot.
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