Growth in Chinese bank lending to govts slowing: Paper

Growth in bank lending to local government finance vehicles in China has been steadily slowing as Beijing take steps to curb such reckless practices, Communist Party mouthpiece the People's Daily said on Saturday.

Chinese banks have extended a huge number of loans to local government finance vehicles since Beijing started its economic stimulus package in late 2008, with the newspaper saying some analysts put the number at 14 trillion yuan (USD 2.2 trillion).
But an unidentified Chinese central bank official told the paper that such estimates were exaggerated.
The real figure was actually less than 30% of China's overall outstanding loans, which stood at 47 trillion yuan as of the end of last year, the official said, without providing a specific figure.
Risk associated with this lending was "generally speaking controllable" and lending growth was steadily dropping back, the newspaper cited the official as saying.
Under Chinese law, local authorities are barred from borrowing directly to pay for projects such as the building of roads and highways. As such, district governments have set up thousands of special financing vehicles to beat the rules.
Beijing launched a 4 trillion yuan pump-priming package in late 2008 to cushion the impact of the global financial crisis, triggering a surge in bank credit and investment.
The stimulus resulted in unfettered lending to local government financing vehicles, hybrid government-company bodies that local governments used to get around official borrowing restrictions.
Beijing has clamped down on such borrowing but in a sign it wants to clean up the debt mess, sources told Reuters it is studying ways to manage losses from 2 trillion-3 trillion yuan of local government loans which it estimates may sour.