Hold onto Your Maos

Those pictures of Mao in your wallet might become that bit more important if Zhang Guangping of the Shanghai branch of the China Banking Regulatory Commission (CBRC) is to be believed. He says the renminbi could make up 3% of the world’s currency reserves by 2020. But even though the deadline is just over a decade away, there’s a lot of work to do, such as making the renminbi convertible (officially approved by CER, since it removes at least one stressor on those trips to see the family). At least some people are worried about too much easy access to the currency here at home, though: The CBRC is known to be nervous about massive bank lending as part of Beijing’s US$586 billion stimulus package, and it’s now trying to take action. The regulator just released a draft of new rules for lending, which, among other things, will require lenders to take the risk of fixed-asset investment loans into account when giving those loans. Furthermore, to ensure that a loan is spent on what it was meant for, any loan exceeding 5% of a project’s investment or that is valued at over RMB5 million must be paid to the parties contracted to complete the work, rather than the borrower. And loans aren’t just in the domestic news. Brazilian state-owned oil firm Petrobras is looking to China for additional loans, after already securing US$10 billion in lending from China in return for oil.