More bank lending paranoia for you today. We established yesterday that China appears to be in a quandary over credit growth: Do we rein it in? Do we let it go? Or has the horse already bolted, meaning we’re set for a return to overcapacity and asset bubbles? Now the China Banking Regulatory Commission (CBRC) has moved to deny reports, which cited the regulator’s vice chairman, that new bank loans will total a massive US$1.17 trillion this year, well beyond the official target of US$732.3 billion. Apparently, CBRC officials are under instructions not to comment on such issues, as lending policy doesn’t fall within their purview (and their concerns about a surge in lending creating a new wave of bad loans are not popular with other government agencies). It’s a fair bet that the mayor of Shanghai would back continued strong credit growth. Shanghai posted year-on-year GDP growth of 3.1% in the first quarter – down on the 6.1% registered for China as a whole and a far cry from the city’s double-digit expansion of recent years. It’s rarely good news when economists use terms like “double whammy,” but that is exactly the predicament Shanghai finds itself in: The economic crisis has decimated external demand at a time when rising local operating costs are already forcing many companies to move elsewhere. Intel may be ditching Shanghai in favor of Chengdu, but at least one local player – Shanghai Bell, Alcatel-Lucent’s China joint venture – had something to smile about. The company has received US$1.7 billion in orders for telecom equipment from China Mobile and China Telecom. So Shanghai’s newly jobless will at least be able to break the bad news to mom via swanky 3G phone services.