According to a report fro the Wall Street Journal,''A new breed of shadow bankers has stepped in to lend to debt-hungry businesses and households as the Chinese government tries to rein in traditional banks''. As Jason Chow reports:
“I am a loan shark but a legal one,” said Raymond Ting, chairman and executive director of Credit China.
Mr. Ting is one of the shadow bankers who have stepped in to lend to debt-hungry businesses and households as the Chinese government tries to rein in traditional banks. Many analysts and investors are worried that the country’s slowing economy could ignite a debt crisis, but shadow lending keeps growing.
In the past five years, borrowing by businesses and households as a percentage of gross domestic product rose nearly 60% in China, according toGoldman Sachs Group Inc. Mr. Ting says down-on-their-luck property developers who have been cut off by banks and need a bit more money to finish a project are typical customers of Credit China.
The company charges the highest interest rate allowed by Chinese regulators—four times the prime lending rate, now 6%—and adds consulting fees that can boost the total borrowing cost to 50% per year.
