Bloomberg says China’s shadow banking is back in full swing.
This is an unintended side effect of the government’s campaign against financial leverage, which has curbed traditional lending and squeezed bond financing, according to Bloomberg.
"Data from the central bank Friday showed that off-balance sheet lending surged 754 billion yuan ($109 billion) in March, taking the first quarter’s total increase to a record 2.05 trillion yuan. Efforts by the People’s Bank of China to curb fresh lending may have prompted borrowers, especially real estate developers, to resort to alternative forms of financing, said Xu Gao, chief economist at Everbright Securities Co.," said Bloomberg in a report.
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