American tariffs on China’s exports have begun to hit the country’s growth prospects. In response, the Chinese Government, becoming increasingly desperate for stronger credit growth, has begun to apply pressure on the countries banking industry to begin issuing more loans to private enterprise.

Currently, many banks enjoy strong credit quality by lending to safe, state operated enterprises with government-sponsored backstops. However, investors worry that the lending drive could end up forgoing due diligence and adding more non-performing loans and bad debt to China’s already growing pile of financial risk . . .

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