PBOC denies rumors about loan crackdown

The People's Bank of China (PBOC), the country's central bank, on Tuesday denied rumors saying that it has barred lending to high energy-­consuming and polluting industries as well as those with overcapacity, but said it will use financial policies to resolve overcapacity issues.

"The PBOC never issued the so-called notice related to loan issuance," the central bank said in a statement e-mailed to the Global Times Tuesday.

But the PBOC said it would adopt differentiated financial policies for different industries under the guidance of modifying and upgrading the economy by the State Council, the country's cabinet, so as to resolve the country's problems of overcapacity.

Media reports said Monday that the PBC had released a notice to commercial banks to prohibit them from offering loans to around 10 industries, including cement and steelmaking.

"The central bank is unlikely to restrict loan issuance to any specific sector or company, while the commercial banks have the responsibility themselves to reduce the financial risks of lending to companies with uncertain prospects," Guo Tianyong, director of the Research Center of China ­Banking at the Beijing-based Central University of Finance and Economics, told the Global Times Tuesday.

"Actually the commercial banks have already become very cautious about lending to high energy-consuming and polluting industries with excess capacity," Guo noted.

An insider from a branch of a State-owned bank in South China's Guangdong Province was quoted by Southern Metropolitan Daily as saying Tuesday that financial risks in lending to high energy-consuming and polluting sectors are much higher than before, and nearly all the banks are trying to reduce lending to those sectors.

As well as financial measures, "a combined group of policies are also needed" to curb the expansion of industries with overcapacity, Chen Yao, an expert with the Chinese Academy of Social Sciences, told the Global Times Tuesday.

Raising entry criteria through higher requirements for energy efficiency and environmental friendliness for these sectors, like the cement and glass industries, could be one possible method, accor­ding to Chen.

Chen also noted that the government could put limits on the amount of land offered for these industries.

To emphasize the central government's determination to curb overcapacity and redundant construction, the National Development and Reform Commission and the Ministry of Industry and Information Technology jointly issued a notice in May about restricting the expansion of industries with excess capacity

The notice required local governments to stop construction of redundant projects, and financial institutions were told not to offer new credit loans to companies or projects with overcapacity.