Bank of China Ltd., the nation’s third-largest by assets, plans to slow credit growth in the second half of the year and improve loan quality after posting an unexpected profit gain in the second quarter.
…Lending in the second half will be “much smaller,” with new credit in July and August dropping from the monthly averages of the first half, President Li Lihui told reporters yesterday.
Monday saw a large decline in the China equities market which capped the monthly decline to seven percent. The reason was straightforward given the report on Bloomberg last Friday. Credit will slow in the second half of the year, so the equity bubble started to pop. What will happen to the rest of the world if central banks do not supply the credit? We need to know whether the current economic upswing is a function of credit expansion or end demand. Right now consumer behavior is still the key to future market advances.
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