Thursday, April 17, 2014

China's money supply rose 12% last year. That's low for them, and credit is scarce.

Reform is hard. As Credit Dries Up, Smaller Companies in China Feel the Pinch
At first glance, it seems extraordinary that anyone in China would have trouble finding credit, given how much money is already sloshing around the country. China’s broadly measured money supply passed that of the United States in August 2009, and it has been soaring ever since. China now has two-thirds more money than the United States, swirling through an economy that is a little over half the size of the United States’.
The central bank has been gradually pushing up open-market interest rates, in the hope that competition will start playing a greater role than political influence in deciding who can borrow money. That policy could help small and medium businesses obtain loans in the long term, but it has had the short-term effect of pushing up borrowing costs.

No comments: