February 26, 2020 10:49 am

Coronavirus: China backs economy

Increased lending might lead to a rising NPL ratio.

The coronavirus is increasingly burdening China’s economy. “We will take measures to deal with problems immediately, and we are confident that it will not lead to large-scale inflation in China,” said the Chinese central bank’s deputy governor Fan Yifei. The economy in China has been virtually at a standstill since the New Year holidays almost six weeks ago. In order to support local companies, the government in Beijing is now appealing to the banks.

The financial institutions should increasingly grant loans to companies – and turn a blind eye to overdue payments. But these measures carry great risks, experts claim. The Chinese government is accepting that the problems with non-performing loans will increase. In order to reduce the NPL quota in the country, Beijing had only last year imposed stricter conditions. South China Morning Post

This post was written by Jens Secker

(Image rights: istockphoto.com/Laikwunfai )

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