Over producing industries not being starved of loans

Chinese government denies ordering halt in lending.

The People's Bank of China, the central bank, strongly denied rumors it had issued a circular asking banks to stop extending new loans to industries such as shipbuilding, steel and cement plagued by overcapacity.

It said it is following instructions from the State Council to adopt tailored policies towards over producing industries. PBOC denies issuing any internal circular on loans and financial problems of industries plagued by overcapacity.

The State Council, China’s cabinet, revealed plans earlier this month to ensure China’s financial sector will help bring about an orderly closure of some factories in industries struggling with overcapacity.

The slowdown in China’s economy has started to put pressure on some businesses in industries that boosted capacity in previous high-growth years.

China Rongsheng Heavy Industries Group, the largest private shipbuilder, this month asked for financial help from the government to deal with shrinking orders.