LENDING & CREDIT | Staff Reporter, China

China banks are the sixth largest creditor group globally

Its cross border financial assets was valued at US$2t in Q3.

Chinese banks have been ramping up their lending activities over the past years as they rank as the sixth largest international creditor group as cross-border financial assets ballooned to about US$2t in Q3 2017, according to the Bank for International Settlements.

The BIS is a Swiss-based international organisation which aims to foster monetary and financial stability and acts as the bank for central banks.

“Chinese banks have become an increasingly important provider of international bank credit, to borrowers both within and outside Asia,” BIS said in its quarterly review.

Banks in Asia’s largest economy are also net creditors in the international lending system as the loans they provide are denominated largely in US dollars.

In absolute terms, Chinese banks are also the third largest provider of USD to the international banking system.

Despite its abundant credit, China is also the largest borrower in emerging Asia. The combined regional share of Indonesia, Korea, Malaysia, Philippines and Thailand dipped from 69% total cross-border credit in Q2 1997 to 23% in Q3 as China borrowed heavily to finance its infrastructure projects and investments resulting in a massive debt burden with non-financial sector debt ballooning from $6t in 2007 nearly $29t in 2017.

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