Jake's View | The beneficiaries of Beijing’s ‘lift off in lending’ seem a little odd
By offering cheap credit for second-hand cars and the idle shipping sector, Beijing is simply postponing a problem that will be harder to deal with in the future
The guidelines – jointly issued by the central bank, the planning agency, the finance ministry and financial regulators – require banks to grant more credit to buyers of clean-energy cars and second-hand vehicles.
They were also directed to continue lending to some clients in steel, non-ferrous metal, coal mining and shipbuilding sectors...
SCMP, February 17
The command was obeyed even before it was heard. Figures just in show that financial institution loans shot up by a record 2.5 trillion yuan (HK$2.98 trillion) in January. Four...three...two...one..., Houston, we have lift-off in lending.
But some of the intended beneficiaries seem a little odd. Why this emphasis on second-hand vehicles?
The chart should give you a clue. In what is possibly not entirely a coincidence, automobile production in the mainland has also shot up to record levels with more than 2.6 million vehicles turned out in December alone.
You may think it odd to gear up car factories in an economic slowdown but there is a bigger problem here, to wit the doubling of car production in 2009, which the chart also shows.
