Economics
Xi's Private Lending Push Risks Being Hamstrung at Local Level
- PIIE’s Lardy thinks local officials committed to prop up SOEs
- He’s also unconvinced Xi committed to boost private sector
President Xi Jinping
Photographer: Lintao Zhang/Getty Images
This article is for subscribers only.
China’s drive to funnel more credit to private companies is set to hit resistance from banks controlled by local governments.
“I’m not expecting a big reversal in the flow of loans in favor of private companies any time soon,” says veteran China watcher Nicholas Lardy of the Peterson Institute for International Economics in Washington. “There’s so much lending from city and rural commercial banks that’s just blowing up their balance sheets to support very under-performing local state companies.”