Admittedly, the local government debt profound impact on the Chinese economy. According to the pcba China National Audit Office's data, the total amount of local financial platform for lending up to 10.7 trillion yuan, of which 79.1% of bank loans. However, the Chinese local government debt is still manageable so far, there is no reason to believe that all of them are non-performing loans. In fact, for most local financial platform, derived from the investment so far is sufficient cash flow to repay principal and interest and debt. Industrial and Commercial Bank of pcb assembly China according to the data, the local financial platform for 93% of all loans paid on time. In fact, the Industrial and Commercial Bank of China local financial platform for single-section rate was only 0.3% negative, while the corresponding rate provisions - the bank's ability to absorb non-performing loan losses - 1066%. According to data from the National Audit Office, 10.7 trillion yuan of local government debt, poor rate of about 2.3%.
Total local government debt and a large part of either the local government is not directly related, or local government can not be guaranteed, so that they legally do not government debt. In addition, the Chinese local government debt accounted for 27% of GDP in 2010, while the central government debt and policy loans accounted for 20% and 6%, so China's overall level of debt to GDP ratio is about 53%, lower than Germany. Thus, while China's local government debt can not say sit back and relax, but there is no reason to panic.
Finally, in China's east coast (especially the Wenzhou) underground lending long. As long as monetary tightening led to contraction of bank credit, small and medium-scale private enterprise is ready to friends and family at very high interest rates and usury from corporate borrowers. In recent years, loans to real estate speculation has become a further important underground source of demand. When the real asset prices and cause the collapse of local credit networks, not only thousands of homes and businesses into bankruptcy situation, the banks will suffer collateral damage, as recently happened in Wenzhou, is clear proof.
However, the severity of the credit crisis, Wenzhou underground has been exaggerated. In fact, Wenzhou, the area of ??underground credit only 20% of total credit, while the region's GDP, pcba manufacturer China accounts for less than 1%. The crisis involved the total bank credit of about slightly more than 30 billion yuan, about Wenzhou 0.5% of total bank loans. Therefore, the fracture network Wenzhou underground credit system of local banks have limited impact on the entire country had no influence.
Thus, while China's economic growth is likely to decelerate sharply in 2012, but a hard landing is unlikely. We do not need overly bearish short-term economic outlook for China, but the basis of the slow pace of adjustment and reform, China's leading global growth is fundamentally unsustainable. The real test has not come