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China's banks resist lending-rate cuts

China’s top four banks are resisting government instructions to decrease lending rates in an attempt to maintain profitability during an economic downturn, Bloomberg reported, citing anonymous officials at each of the lenders. The banks are apportioning discounts to favored corporate clients at 10% of the interbank rate.  In July, the central bank allowed lenders to provide loans at 30% below the benchmark rates. These discounts have not been adopted by the banks in an effort to avoid the spiraling loan defaults that materialized after the post 2008 stimulus packages. However, maintaining high interest rates may dilute government efforts to stimulate the economy. The National Development and Reform Commission had approved roughly US$111.52 billion in infrastructure construction by the end of August, the 21st Century Business Herald reported Thursday.

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