A government-controlled website that releases financial regulatory decisions said at the end of last week<br />that the China Banking Regulatory Commission had asked its branches to examine loan guarantees across the nation immediately because of problems in places like Shandong province, where Zouping is.<br />The Obama administration last year and now the Trump administration this year have strongly criticized China for bankrolling the overexpansion of its steel and aluminum industries, contending<br />that the loans have made it hard for steel and aluminum companies elsewhere to compete.<br />The Chinese government has begun an urgent effort to discourage companies from guaranteeing one another’s bank debts, ordering<br />local banking regulators across the country to file comprehensive reports by the end of the month on the problem.<br />“Because of the limited transparency and disclosure,” said Grace Wu, a senior director<br />and the head of China bank ratings at Fitch Ratings, “it’s hard to know where the true risk lies.”<br />Loan guarantees are just part of a much broader debt challenge in China.<br />The commission has instructed its local regulators to pay particular attention to loan guarantees in sectors like aluminum production<br />and steel manufacturing, the website said, highlighting two industries suffering from overcapacity in China.
