China’s looming NPL crisis

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LEVERAGE IS BACK – at least in China. In just the first two months of the year, China’s banks advanced a mind-boggling Rmb2.7 trillion ($390 billion) of new loans. That amounts to more than 10% of China’s GDP.

The banks aren’t finished yet. Prime minister Wen Jiabao has set a new loan growth target of Rmb5 trillion for 2009 to support his government’s Rmb4 trillion economic stimulus package, which was announced last November.