Aggressive lending leads to cash crunch fears

China’s big four state-owned banks extended US$27.7 billion (RMB170 billion) in yuan loans in the first week of July, a tremendous amount of credit compared to the US$44 billion in loans for all of June, Reuters reported, citing state media. The surge in new lending is purportedly a response to the credit crunch at the end of June, the report in state-backed Shanghai Securities News said. Traders warned that similarly massive lending at the beginning of June was what lead the central bank to restrict lending, causing the cash crunch. In the first ten days of June, China’s big four banks extended US$35.4 billion in new loans.