China’s bad-loan data, which analysts and investors have long regarded to be understated, was thrown into question again after the banking regulator uncovered faked reporting at a local lender.
Shanghai Pudong Development Bank Co (上海浦東發展銀行), the nation’s ninth-largest lender, over many years illegally lent 77.5 billion yuan (US$12.1 billion) to 1,493 shell companies to take over bad loans at its Chengdu branch, the China Banking Regulatory Commission (CBRC) said in a statement late on Friday.
The branch, which had reported zero bad loans, inflated its earnings and faked other operational data to improve performance and evade compliance, the CBRC found.
The regulator imposed a fine of 462 million yuan on the branch and said its senior executives would face prosecution.
In a statement after the announcement, Shanghai-based Pudong Bank said it has booked the fines in its financial results from last year and vowed to strengthen compliance and internal controls.
Shares of Pudong Bank yesterday fell as much as 2.9 percent in Shanghai morning trading, the biggest intraday drop since August last year.
“This is a well-organized fraud engineered by Pudong Bank’s Chengdu branch,” the CBRC said in the statement. “It involved a massive amount of money, used hidden schemes and had profoundly damaging implications.”
The case raised fresh doubts about the accuracy of financial and economic data reported by Chinese companies and local authorities.
Inner Mongolia this month joined neighboring Liaoning Province in admitting inflating key economic figures, prompting the head of China’s statistics bureau to verify local accounts.
Chinese President Xi Jinping (習近平) said earlier that officials must be “frank and forthright” when delivering their reports.
CBRC chairman Guo Shuqing (郭樹清), nearly one year into the job, has launched a campaign to root out malpractice and strengthen controls over the banking industry amid surging risks from poor corporate governance, violation of lending policies and cross-holding of financial products.
Chinese lenders have been grappling with a growing mountain of bad debt after flooding the financial system with cheap credit for years to prop up economic growth.
Their official non-performing loan ratio stood unchanged at 1.74 percent as of Sept. 30 last year, CBRC data showed. By contrast, CLSA Ltd estimated the ratio at 15 percent to 19 percent in 2015.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts