Bank time bombs waiting to blow in China

So it would seem:

“China’s banks are veering out of control. The half-reformed economy of the People’s Republic cannot absorb the $1,000bn (£600bn) blitz of new lending issued since December. ..Michael Pettis from Beijing University says China’s public debt may be as high as 50pc-70pc of GDP when “correctly counted”…Bank exposure to corporate debt has reached $4,200bn. It is rising at a 30pc rate, even as profits contract at a 35pc rate…Roll-over risk is rocketing. China’s monetary stimulus since November is arguably more extreme than the post-Lehman printing of the US Federal Reserve, though less obvious to the untrained eye….Andy Xie, a Sino-bear and commentator for Caijing, said Western analysts are in for a rude shock if they think that China’s surging demand for raw materials implies genuine recovery…Commodity speculators have been using cheap credit to play the arbitrage spread between futures and spot on the oil markets. They have even found ways to trade lumber to iron ore by sheer scale of leverage. “They’ve made everything open to speculation,” he said.”…

Source: Telegraph

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