January 2019 China Bank Survey

CHINA ADVISORY - Report 24 Jan 2019 by Andrew Collier

China’s banking system is under pressure to strike a balance between supporting economic growth and reducing credit risks. On one hand, Beijing is calling for lenders to step up funding for small businesses and infrastructure projects to revive the ailing economy. On the other hand, worsening corporate performance and high leverage in the broader economy are making credit expansion a risky move. We found in our research that banks are splitting the difference: increasing loans to consumers and SMEs, with small increases in infrastructure loans, and continued restrictions on shadow banking.

To find out how Chinese lenders are addressing the challenge, we examined 15 banks from seven provinces during the second week of January. This is our third monthly survey and is a leading indicator of financial flows.

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