China business digest

Your daily digest of the biggest business news in China, translated and summarized every day.

Major banks reduce exposure to industries suffering from oversupply

Twenty-one major banks have reduced the amount of credit they have lent to firms operating in industries experiencing oversupply, according to Economic Daily.

The paper quotes data from the first three quarters of the year showing that total outstanding loans to steel, cement, glass, aluminium smelting, ship manufacturing and other industries with oversupply problems from 21 major financial institutions had fallen by 26.9 billion yuan to just over 1 trillion yuan since the start of the year.

The represents a 2.5 per cent drop in the total amount of loans outstanding. Loans to these industries now account for 1.6 per cent of total lending, a 0.2 percentage point drop on the proportion at the start of the year.

The fall in the amount loaned to these troubled sectors follows moves from the China Banking Regulatory Commission to limit credit.

The number of non-performing loans to firms involved in the 5 industries with the biggest oversupply problems has also increased, though it still remains at relatively low levels.

As of the end of September, almost 13.2 billion yuan worth of loans to these sectors were in trouble, an increase of 2.7 billion yuan on the value of non-performing loans at the start of the year.

This results in a NPL ratio of 1.26 per cent, a 0.29 percentage point increase on the ratio at the start of the year.

(Economic Daily)

Verdict in first anti-monopoly case involving Chinese oil giants

A subsidiary of China Petroleum and Chemical Corporation (CPCC or Sinopec), one of China's three state-owned energy giants, has been found in violation of China's anti-monopoly law and has been ordered to allow a private company to sell their biodiesel products via Sinopec's distribution system within 30 days.

A Yunnan court handed down the verdict in a case involving the private oil company Yunnan YingDing Bio-Energy Co. and the Yunnan subsidiary of Sinopec yesterday.

A spokesperson for Sinopec's Yunnan branch told a reporter from National Business Daily that the company was still deciding whether to lodge an appeal.

China's anti-monopoly law came into effect in 2008.

Earlier this year, some international media reports suggested that Chinese authorities were unfairly targeting multinational companies operating in China. China's regulators have said their enforcement is fair and transparent.

(National Business Daily)

40 per cent bad loans at rural credit unions

40 per cent of outstanding loans at 60 credit rural unions in Liaoning provinces are estimated to be non-performing, according to Economic Observer, a Chinese-language business paper.

Industrial source estimates 25 billion yuan out of 60 billion yuan outstanding are likely to be non-recoverable. Industry experts say risk control system at rural credit unions is weak and not as robust as commercial banks.

Beijing is offering policy concessions to banks that lend more money to farmers and SME sector.

(The Paper)

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