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 However at the same time, the China Banking Regulatory Commission
will continue to support buyers of affordable housing, first-time
home buyers and small- and medium- sized businesses amid signs of a
slowing economy.
"Currently, the economy, broadly speaking, is stable. But downward
pressures are relatively significant which is a reflection of ...
imperfect financing structures, inefficiencies in finance allocation
and use and difficulties with SME (small and medium enterprises)
financing," a press release circulated at the CBRC's conference
said. Wang Zhaoxing, a vice president at the China Banking
Regulatory Commission, told a news conference that the regulator
will improve ways to manage deposit-to-loan ratios, an indicator of
a bank's ability to absorb risk, and classify bad loans.
The term shadow banking refers to off-balance sheet lending by banks
and any financing provided by a non-bank entity, such as credit
guarantee firms, trust companies and other lenders, including pawn
shops, for Chinese borrowers. The government has been trying to rein
in the riskiest forms of non-bank credit, which has grown rapidly in
China since 2010, afraid that the funds were being used to roll over
bad debt and exacerbating asset price bubbles in real estate and
industrial ovecapacity.
However, Beijing does not want to eliminate all forms of shadow
banking, as they can also play a positive role in allocating and
pricing capital, while also helping diversify funding channels in an
economy historically over-dependent on bank lending for finance.
Indeed, the growth of total social financing -- a home-grown
indicator that measures shadow banking as well as traditional
lending -- slowed in April, highlighting the risk that efforts to
restrain high-risk lending could have knock-on effects on healthy
credit growth if not handled correctly. The shadow banking sector
may be worth up to 27 trillion yuan ($4.32 trillion), a figure
accounting for nearly a fifth of the nation's banking sector,
according to a recent report by the Chinese Academy of Social
Sciences.
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The International Monetary Fund said in April that reining in
China's shadow banking sector is crucial to global efforts to
prevent the risk of a prolonged world slump. [ID:nW1N0N2000]
China's central bank pledged in March to improve its monitoring of
the shadow banking sector, as part of an effort to make its data on
bank credit and interest rates more accurate. [ID:L4N0MO2PT]
CBRC will improve credit asset securitization, and plans to maintain
steady monetary policy and make minor adjustments as needed, it
added. Wang added that the regulator will continue to oversee online
financing to ensure it develops in a healthy way.
($1 = 6.2548 Chinese Yuan Renminbi)
(Reporting by Shen Yan and Jonathan Standing; Writing by Engen Tham;
Editing by Kazunori Takada and Simon Cameron-Moore)
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