China Blocks Borrowers From Coronavirus Loans

On February 5, I posted: Inflation Coming? China Reverses Deleveraging Effort Amid Coronavirus Outbreak. I speculated that loosened lending standards will attract speculators and others seeking credit for unrelated reasons.
China will help companies amid the ongoing shutdown related to the coronavirus outbreak. Many of these policies are a reversal of deleveraging efforts made in the past year or two. They are loosening lending and reversing the crackdown on underpayment of social security. The social security taxes will be repaid later, but how many businesses will take the opportunity to load up on credit?
And yes, those companies are trying.

Caixin: China Blocks Access to Cheap Epidemic Loans for 48 Firms
Chinese authorities have booted 48, mostly state-owned, enterprises off an official list of companies eligible for special low-cost loans under a government initiative to boost financial help for firms actively engaged in the battle against the coronavirus epidemic out of concern the loans would not be used for their intended purpose.

The 48 companies comprise five coal producers, 38 transport companies and five local government financing vehicles, Caixin learned on Tuesday from sources close to banks and financial regulators. Some of them had tried to get loans under the 300 billion yuan ($42.8 billion) special-purpose relending program by pretending to produce goods such as disinfectants, the sources said. Loans already made to these companies will no longer benefit from the preferential interest rates, they said.
China has good information on SOEs, but even these guys were bold enough to try. No doubt there are many private borrowers loading up for the post-corona boom.

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