Deleveraging Impacts Private Business

FT explains why China has renewed its focus on SME financing costs (See: China's SMEs Cannot Obtain Low Cost Credit, Can Li Keqiang Finally Save Them?

FT: China’s war on debt hits heart of private enterprise
In a survey of 72 small and medium-sized private companies in this eastern province, just 16.7 per cent said their long-term debt had increased over the past 12 months, while 36.1 per cent said it had not risen. When we last surveyed Zhejiang companies in 2016, 35 per cent said their long-term debt had increased from a year earlier.

...Officials at Zheshang Bank and Hangzhou Union Bank, two major Zhejiang lenders, said they had cut lending to smaller — read private — borrowers. They complained that a shortage of deposits limited their ability to lend, and acknowledged that they were doing less off-balance-sheet lending as regulations have tightened. 

One Zheshang Bank official said that last year he worked on more than Rmb4bn ($603m) in entrusted, or intercompany, loans and trust loans but had done none so far in 2018.
Mr Zhao is paying 50 per cent more to borrow than he did two years ago. Among all survey respondents, 48.4 per cent reported a year-over-year increase in funding costs — 39.4 per cent said so in 2016 — while just 9 per cent reported a fall.
Things are still far better than they were in 2014: Rumored Mass Death of Companies in Xiaoshan District of Hangzhou If Banks Collect on Debts; Government Tells Banks to Sit Tight or Leave.

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