China will slow its massive lending spree and step up monitoring of banks as it tries to prevent speculative bubbles in real estate and other assets while keeping the country’s economic recovery on track, a top regulator said yesterday.
China’s banking system is healthy despite last year’s explosive growth in credit and regulators could manage the risks, said Liu Mingkang (劉明康), chairman of the Chinese Banking Regulatory Commission.
“We are confident that risks envisaged could be well absorbed,” Liu said at a financial forum in Hong Kong.
PHOTO: REUTERS
Record bank lending last year to support government spending on infrastructure and other projects under Beijing’s stimulus package has led to fears of asset bubbles and huge bank losses if too many loans turn sour.
After handing out some 9.5 trillion yuan (US$1.39 trillion) in loans last year, banks were expected to scale back lending to roughly 7.5 trillion yuan this year, Liu said.
This year, the total amount of loans will grow by as much as 18 percent year on year, compared with nearly 32 percent last year, he said.
“This year, we will continue to control the pace and demand of the credit supply,” he said. “We shall control, and we have controlled, the credit growth the whole year round.”
Already, “corrective actions” have been taken against banks that lent too much or made bad loans to root out “excessive” exposure, consumer credit card risks and other problems, he said.
Regulators were paying special attention to loans for local government projects and real estate. All banks have been ordered to “heighten their vigilance against an impossible, embedded credit risk,” Liu said.
New leverage and liquidity restrictions would be imposed, he said.
Meanwhile, IMF managing director Dominique Strauss-Kahn reiterated yesterday his call for China to boost the value of its currency, the yuan, as critics accuse Beijing of keeping the unit artificially low to boost exports.
Strauss-Kahn played down fears about an asset bubble forming in China and the wider region, a growing worry as regional property prices surge, but Asian countries should usher in temporary capital controls as a response to the massive amount of foreign money flowing into their economies, he told the Asian Financial Forum in Hong Kong.
The region must also look at boosting domestic demand to cut its reliance on foreign consumers, especially in the hard-hit US, he said.
The Legislative Yuan’s Finance Committee yesterday approved proposed amendments to the Amusement Tax Act (娛樂稅法) that would abolish taxes on films, cultural activities and competitive sporting events, retaining the fee only for dance halls and golf courses. The proposed changes would set the maximum tax rate for dance halls and golf courses at 50 and 20 percent respectively, with local governments authorized to suspend the levies. Article 2 of the act says that “amusement tax shall be levied on tickets sold or fees charged by amusement places, facilities or activities” in six categories: “Cinema; professional singing, story-telling, dancing, circus, magic show, acrobatics
Tainan, Taipei and New Taipei City recorded the highest fines nationwide for illegal accommodations in the first quarter of this year, with fines issued in the three cities each exceeding NT$7 million (US$220,639), Tourism Administration data showed. Among them, Taipei had the highest number of illegal short-term rental units, with 410. There were 3,280 legally registered hotels nationwide in the first quarter, down by 14 properties, or 0.43 percent, from a year earlier, likely indicating operators exiting the market, the agency said. However, the number of unregistered properties rose to 1,174, including 314 illegal hotels and 860 illegal short-term rental
INFLATION UP? The IMF said CPI would increase to 1.5 percent this year, while the DGBAS projected it would rise to 1.68 percent, with GDP per capita of US$44,181 The IMF projected Taiwan’s real GDP would grow 5.2 percent this year, up from its 2.1 percent outlook in January, despite fears of global economic disruptions sparked by the US-Iran conflict. Taiwan’s consumer price index (CPI) is projected to increase to 1.5 percent, while unemployment would be 3.4 percent, roughly in line with estimates for Asia as a whole, the international body wrote in its Global Economic Outlook Report published in the US on Monday. The figures are comparatively better than the IMF outlook for the rest of the world, which pegged real GDP growth at 3.1 percent, down from 3.3 percent
ECONOMIC COERCION: Such actions are often inconsistently applied, sometimes resumed, and sometimes just halted, the Presidential Office spokeswoman said The government backs healthy and orderly cross-strait exchanges, but such arrangements should not be made with political conditions attached and never be used as leverage for political maneuvering or partisan agendas, Presidential Office spokeswoman Karen Kuo (郭雅慧) said yesterday. Kuo made the remarks after China earlier in the day announced 10 new “incentive measures” for Taiwan, following a landmark meeting between Chinese President Xi Jinping (習近平) and Chinese Nationalist Party (KMT) Chairwoman Cheng Li-wun (鄭麗文) in Beijing on Friday. The measures, unveiled by China’s Xinhua news agency, include plans to resume individual travel by residents of Shanghai and China’s Fujian
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