China Warns Banks Over Asset Bubbles

By Daniel Indiviglio

Chinese regulators on Monday ordered banks to ensure unprecedented volumes of new loans are channelled into the real economy and not diverted into equity or real estate markets where officials say fresh asset bubbles are forming.

The new policy requires banks to monitor how their loans are spent and comes amid warnings that banks ignored basic lending standards in the first half of this year as they rushed to extend Rmb7,370bn in new loans, more than twice the amount lent in the same period a year earlier.

This article available online at:

http://www.theatlantic.com/business/archive/2009/07/china-warns-banks-over-asset-bubbles/22195/