Fraud cases in China worry foreign lenders

Foreign lending in China has grown 47% over the previous year, but a string of suspected fraud cases has raised concerns regarding where that money ends up, The Wall Street Journal reported. It came as a surprise to the Western banks involved when the chairman of Chinese property developer Agile Property Holdings, which is currently struggling with a US$475 million loan obligation, was taken into custody recently. This followed numerous other cases, including US$60 million lent to Chinese shoe company Ultrasonic that went missing, and the current legal battle involving half a dozen Western lenders regarding a fraud case at Qingdao port. China’s declining property market, which accounts for nearly one-quarter of the country’s economy, has led to a spike in bad loans and increased risk for lenders.