The International Monetary Fund has warned Hong Kong on exposing itself to Chinese debt via lending to mainland companies, cautioning them to tighten regulatory approvals, South China Morning Post reported. Bankers say the IMF is worried that China’s shadow banking clampdown will send more risky Chinese borrowing scurrying over to the territory. Loans outstanding from Hong Kong banks to mainland entities total US$430 billion. The warning comes as the increasing likelihood of a credit crunch in China raises fears that defaults from Chinese companies could spread financial contagion to Hong Kong’s economy.
Categories