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Continued: China's campaign to clean up risky bank lending threatens credit for entrepreneurs

  • Article by: JOE MCDONALD , AP Business Writer
  • Last update: June 28, 2013 - 1:15 AM

Total credit compared to annual economic output has risen by 50 percentage points to 210 percent since the 2008 global crisis, according to UBS economist Tao Wang.

The underground lending industry was battered by the slump in global demand in 2010. That caused a wave of business failures and defaults, prompting protests in some areas and making savers wary of lending.

Chinese leaders have promised repeatedly to have state banks lend more to the private sector. But most loans still go to state enterprises that have close ties with banks and influential officials. Entrepreneurs say it is no easier to get a loan.

The promise of more lending "is only an aspiration," said Yin, the CASS researcher. "If nothing changes in the system, the difficulty of financing the private sector will remain unresolved."

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