China’s unprecedented drive to bolster its cash-strapped private sector has come at a cost.
More loans have been made to the country’s underserved private companies, which have long lacked the same access to credit as their state-backed peers, but the achievement has come at the cost of lost business for smaller lenders.
Local authorities have pledged to bail out private businesses in the face of a sharp decline in domestic equity markets, but the efforts have raised concerns that any rescue might end up encouraging more irresponsible corporate borrowing.
Since last October, the country’s top leaders have mounted an unprecedented rescue of the private sector which has struggled amid a cooling economy, the government’s long-running debt-control campaign and trade tensions with the U.S. In addition, a sluggish stock market increased the pressure on many private companies that relied on loans backed by pledged shares.
Also, as banks look for ways to grant lower-cost loans to small businesses without compromising risk controls, they have come up with a few novel ways of lending.
Read the full in-depth story on Caixin Global later today.
Contact reporter Timmy Shen (firstname.lastname@example.org, Twitter: @timmyhmshen)