MNI POLICY: China Govt Push for More Lending Unsound: Scholar

By Archie Zhang

     BEIJING (MNI) - China's campaign to push lenders to support the real

economy in the hope of boosting growth carries risks, Wu Xiaoqiu, an influential

Chinese economist and vice president at Renmin University, said Saturday. 

     Top-down administrative pressure to give life-support to ailing industries,

such as coal mining, places banks at greater risk and violates free market

principles, Wu told a conference at the school , an institution that serves as a

think tank to policymakers.

     Finance can help the economy, but it shouldn't be relied on to salvage it,

Wu said. Turning the "finance must service the economy" campaign to a political

mission is unsound, he said. 

     A government campaign to force banks to promote green finance over the last

few years is yet another example of an ill-advised policy, Wu said.

     China's regulators need to further raise controls over listed companies and

rating agencies, Wu further said. China has many AAA-rated companies, yet their

bonds often have to high pay interest rates, contradicting their top-rated

credit standings, Wu said.

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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