Chinese Watchdog Eyes Local Loan Books

From the Financial Times:

China’s top bank regulator has expressed concern over loans made to local government companies, saying Beijing was prepared to dispatch investigators across the country to check the debt carried by these vehicles.

Liu Mingkang, head of the China Banking Regulatory Commission, said on Sunday China’s financial institutions had until the end of June to submit “comprehensive” reviews of their loan books.

Localities in China have borrowed heavily from banks for pet investment projects, often posting vacant land as collateral. Unofficial estimates of their exposure run as high as Rmb11,400bn ($1,670bn).

The precise size of local debts has become the focus of foreign investors concerned about a property bubble in China.

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