“China’s new yuan loans were the most in a year and money-supply growth quickened after Premier Wen Jiabao moved to bolster the economy by cutting banks’ required reserves and helping smaller businesses get financing.
Local-currency-denominated loans were 1.01 trillion yuan ($160.1 billion) in March, the People’s Bank of China said today, exceeding all 28 estimates in a Bloomberg News survey. M2, the broadest measure of money supply, grew 13.4 percent from a year earlier. China’s foreign-exchange reserves, the world’s largest, rose to a record $3.31 trillion as of March 31 after dropping for the first time in more than a decade in the fourth quarter….”
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Look at the loss provisions. They’re booking big profits because they’re refusing to hold reasonable reserves. That’ll change as the loans start to actually come due.
That or China smashes the renminbi into a zillion pieces by continually recapitalizing banks and letting them play this game ad infinum. Either way, bad for foreign China bulls.
Are the Chinese clever with the fixed yuan rate?
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