Recently, major state-owned banks in China released their credit data with unusually upbeat figures. Experts said that the data came on the heels of the 20th National Congress. They wanted to create an illusion of economic prosperity to hail the Chinese Communist Party (CCP).
On October 16 when the congress started, five state-owned banks collectively announced their credit operations for the first three quarters of the year.
These lenders are the Bank of China, the China Construction Bank, the Industrial and Commercial Bank of China, and the Agricultural Bank of China, and the Bank of Communications.
A week earlier, on October 10, the Postal Savings Bank, another state-owned lender, also announced its credit situation.
Data shows that as of the end of September, the new loans of these six banks reached 9.53 trillion yuan ($1.32 trillion), a surge of 31.3% year-on-year.
Scholars and businesses questioned the authenticity of the data. They claimed that now when the economy is depressed and private enterprises are in difficulty, no one wants to take credit.
The six major banks published their data while Chinese officials decided to indefinitely postpone the release of economic data for September and for the third quarter, which is heightening speculations of a recession.
Xie Tian, a professor of marketing at the University of South Carolina Aiken, said that the banks’ move is obviously in response to the convening of the 20th National Congress.
Xie said that the authorities suddenly postponed the scheduled release of China’s economic data, meaning the data may not be so good. They do not want a negative impact on the congress. However, the six major banks have provided good loan figures, and they are allowed to release that data.
The professor said that China’s economy always has problems with excessive credit and high leverage. So expanding investment now will make the problem of excessive leverage even worse.
A mainland businessman named Wang Jun also questioned the six banks’ credit data.
Wang said that many private enterprises and small- and medium-sized enterprises are now reluctant to take out loans despite low interest rates.
Wang explained that it is difficult to do business now, and the loans will bring their own burden because consumption is sluggish now. He added that he wants to lay off staff.
Data from Ping An Bank, a leading joint stock bank, shows a different picture. Its semi-annual report stated that the new credit in the first half of the year was 161.7 billion yuan, a year-on-year decrease of nearly 47 billion yuan.
The new loan growth announced by the six state-owned banks is considered quite high given the fact that the ailing property market has not absorbed loans this year.
In another opinion, people’s willingness to save has greatly increased this year, and their willingness to buy a house has greatly decreased. This makes the funds stranded in the financial system even more difficult to release.