China Emerges as Largest Market Destination for International Bank Lending
China is fast becoming the largest emerging market destination for all international bank lending which account for a quarter of cross border claims in all emerging market economies. According to a report cross border claims and a quarterly report from the Bank of International Settlements, China has increased by US$ 65 billion in the second quarter of 2014 to US$ 1.1 trillion nearly 50 percent by the end of June.
China by far became the largest borrower for the Bank of International Settlements and outstanding cross border claims in residents totaled US$ 1.1 trillion by the end of June compared to India and South Korea with claims fo US$200 million each and Brazil with a claim of US$311 billion. China share of BIS reports banking foreign claims on emerging markets stand at 28 percent in the middle of 2014 up from 6 percent at the end of 2008. The Bank of International Settlement said that China’s status now is the principal emerging market destination for international bank lending which reflects financial evolution since the financial crisis of 2008-09.
But concerns are mounting among international investors of the credit bubble that is currently developing in China since the property market is considered the biggest risk. Then in November after saying that the country does not need any economic stimulus, the central bank surprised the market by cutting interest rates to help growth and for companies to pay off their debts.
Cross border claims outside China increased by 2.7 percent or US$ 33 billion in which this increase are mainly coming from Asia.