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High bank loans may mar industry

CHINA'S record surge in bank lending, driven by government stimulus programs and lenders' profit targets, may be undermining the future health of the industry, Fitch Ratings said in a report yesterday.

China's banks issued a staggering 5.2 trillion yuan (US$761 billion) in new loans in the first four months this year. Much of the financing is thought to be related to the government's 4-trillion-yuan economic stimulus program, which is largely focused on construction projects and other public works. But the pace of lending is faster than infrastructure projects could possibly be started up, Fitch Ratings banking analyst Charlene Chu said. One warning sign, she said, was an admission in the central bank's quarterly report that regulators were looking into where all the bank loans are going.


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