On October 17, Chinese officials said the release of economic data for September and the third quarter would be postponed indefinitely. However, two days earlier, the country’s six major state-owned banks released high credit data. Experts say the release of data on the occasion of the 20th National Congress is intended to create the illusion of economic prosperity. Entrepreneurs question the accuracy of the data, saying that now the economy is in recession, private businesses are crying out, and there are basically no people who need credit.

On October 16, the day of the CCP’s 20th National Congress, five state-owned banks of the CCP (Bank of China, Agricultural Bank, Industrial and Commercial Bank of China, Construction Bank of China and Bank of Communications of China released their financial statements for the first three quarters of this year. On the 10th, the Postal Savings Bank also made a related announcement. Data shows that as of the end of September this year, new loans by the six major state-owned banks totaled 9.53 trillion yuan (about $1.3 trillion), up about 31.3% year-on-year.

Regarding the release of high credit data by the six major banks, Xie Tian, ​​a professor at the Aiken School of Business at the University of South Carolina, told The Epoch Times on the 19th that this is clearly in response to the organization of the 20th National Congress.

He said: “We saw that the CCP suddenly postponed the release of China’s economic data indefinitely. Obviously, the data was not good, so it did not want to increase the negative impact on the 20th National Congress. The big six banks have put up good lending numbers, with loan growth in all sectors, as a way of reflecting the booming economy.”

Xie Tian said that the Chinese economy has always had problems with excessive credit and high interest rates. “The expansion of investment now will make the problem of high interest rates even worse, which will increase the total debt of businesses. In fact, the consumption that actually drives the economy hasn’t grown more, so this is a way of creating a false peace for the 20th National Congress.”

Credit data of six major banks in doubt

Regarding credit data published by the six major banks, Chinese businessman Wang Jun told The Epoch Times that when the CCP opened its 20th National Congress, the banks wanted to express its support for economic development. “But with the data reported by any statistical method, there is no way to judge right and wrong,” he said.

Wang Jun said that now many private enterprises and small and medium-sized enterprises are very afraid to borrow capital, he said: “Like my business, every day there are big banks and some private companies asked me if I wanted a loan. They said that the interest rate was very low, no formalities, … I refused all of them. Business is difficult now, why have to bear this burden (loan money), and loans also do not bring much benefit, (because now) consumption is not good.”

“I have met some big bosses, just like me,” said Wang, “they said, now what do I need capital for, to expand the factory? I even want to reduce the staff. Now in this situation, a business owner with a bit of mindset would know what the result would be if he invested money in it.”

According to data, Ping An Bank’s semi-annual report showed that new credit in the first half of the year was 161.65 billion yuan (about $22 billion), down 46.95 billion yuan (about $6.4 billion) from the same period last year.

According to credit investment data for the first half of the year released by the Central Bank of China, the growth rate of household loans and consumer loans both decreased year-on-year and the lending market was quiet in the first half of the year.

So are the new loans of the six big state-owned banks really that high in the first three quarters of the year? The host of “Xiaocui’s political and economic affairs” analyzed in her program that in addition to a large amount of bank credit invested in large central and state-owned enterprises, there is a large amount of underperforming funds in the financial system.

She said that China’s banks have a type of activity called arbitrage business, which allows banks to scale up credit, but keep money circulating in the financial system. “Central bank monetary policy is really inefficient, but it can create a huge M2 money supply, so when we look at China’s economic data, we usually must look at the substance through the phenomenon, and rule out the possibility of technical deviation.”

Figures show the pre-M2 growth rate was 8.3% in the first three quarters of last year, compared to 12.1% this year. Yuan lending growth in the first three quarters of last year was 16.72 trillion yuan (about $2.3 trillion), of which household loans increased by 6.3 trillion yuan (about $860 billion). In the first three quarters of this year, the increase in yuan lending exceeded last year’s to 18.08 trillion yuan (about $2.5 trillion), but the increase in household lending was only 3.41 trillion yuan (about $470 billion), only about half of last year.

The host of “Xiaocui’s political and economic affairs” said: “This shows that the circulation this year is more than last year. In the past, the real estate market would absorb this over-issue. This year, we discovered from the data that the capacity (absorption) of the real estate market has lapsed”

In addition, yuan deposits increased by 22.77 trillion yuan (about $3.1 trillion) in the first three quarters of this year, of which household deposits increased by 13.21 trillion yuan (about $1.8 trillion), while in the first three quarters of last year, deposits in yuan increased by only 16.61 trillion yuan (about $2.3 trillion), and household deposits increased by only 8.49 trillion yuan (about $1.2 trillion). This year, people’s willingness to save has increased a lot, while their willingness to buy a house has decreased significantly, which makes the stagnant money in the financial system even more difficult to solve.

The host said that without the takeover and support of state-owned enterprises on bank credit, “the decline in bank credit this year will be more severe”.

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