When is a bad loan not a bad loan? When China’s government says it isn’t
China has told its big government controlled banks to roll over loans to local governments. That means local governments that borrowed from the banks to pay for the 2008 stimulus plan ordered by Beijing and to finance everything from factories to roads to apartment complexes to shopping malls to the tune of 10.7 trillion yuan ($1.7 trillion) won’t have to pay back those loans as they mature.
China’s economy keeps on slowing–look for the People’s Bank to move again in early January
Manufacturing in China slowed in December—that makes two months in a row—according to a purchasing managers index released today. That has increased the odds that the People’s Bank of China will cut bank reserve requirements again—and before financial markets come back from their New Year break on January 3.
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