While banks in the United States and Europe are still reluctant to make loans because of fears they will not get their money back, Chinese banks issued a record 7.4 trillion yuan, or $1.1 trillion, in loans during the first six months of this year, mostly to big state-owned companies and government infrastructure projects.
Here are just a few examples of the largess: In March, the city of Guangzhou was given a loan of 81.3 billion yuan to improve road transportation; in May, China’s Aviation Industry Corporation said it would receive 100 billion yuan to help the company export high-technology equipment; and a few weeks ago, the China National Nuclear Corporation received loan approval for nearly 100 billion yuan to advance the development of nuclear power.
“They opted for a very quick fix,” said Stephen Roach, an economist and chairman of Morgan Stanley Asia. “Surging investment, fueled by the most rapid bank lending in history, accounted for nearly 90 percent of China’s G.D.P. growth in the first half of this year. And that is worrisome.”
Mr. Roach said China’s growth remained too heavily weighted toward investment, rather than consumption, creating unhealthy, imbalanced growth.
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