The banking regulator of the central Chinese province of Henan has told lenders to grant at least RMB 450 billion ($67 billion) in new loans this year to help shore up the local economy, the South China Morning Post reports. The Bank for International Settlements published a quarterly report on Sunday saying China’s first-quarter “credit-to-GDP gap”, a measure of credit vulnerability, was three times higher than the danger line. The reading was also higher than the levels in East Asia before the 1997 Asia Financial Crisis or in the United States before the outbreak of the 2008 financial crisis. It was also reminiscent of financial practices in the 1990s, when Chinese bank branches were asked to bankroll local government projects, which resulted in a banking bailout.
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