Central bank chief warns that some investors may have problems repaying loans later on
BEIJING - CHINA'S massive economic stimulus plan has launched some projects that are wasteful, possibly making it hard for investors involved to repay bank loans, China's central bank chief said on Saturday.
'Some projects may be too wasteful, and some projects in local areas may endanger (investors') ability to pay back loans,' Mr Zhou Xiaochuan, governor of the People's Bank of China, told a forum at the Chinese Academy of Social Sciences, without elaborating. His comments underscored government worry about risks from the torrent of spending helping to shore up economic growth.
He said China should formally allow local governments to issue bonds to replace the current irregular practices.
'As the front gate is still closed, many local governments had to launch fund-raising platforms, which makes it harder to control, and there may be big problems in future,' he warned.
Beijing announced a four trillion yuan (S$849 billion) stimulus package at the end of last year to help the economy weather the global slowdown, and banks have rushed to lend money to government- backed projects across the country.
