A government-controlled website that releases financial regulatory decisions said at the end of last week
that the China Banking Regulatory Commission had asked its branches to examine loan guarantees across the nation immediately because of problems in places like Shandong province, where Zouping is.
The Obama administration last year and now the Trump administration this year have strongly criticized China for bankrolling the overexpansion of its steel and aluminum industries, contending
that the loans have made it hard for steel and aluminum companies elsewhere to compete.
The Chinese government has begun an urgent effort to discourage companies from guaranteeing one another’s bank debts, ordering
local banking regulators across the country to file comprehensive reports by the end of the month on the problem.
“Because of the limited transparency and disclosure,” said Grace Wu, a senior director
and the head of China bank ratings at Fitch Ratings, “it’s hard to know where the true risk lies.”
Loan guarantees are just part of a much broader debt challenge in China.
The commission has instructed its local regulators to pay particular attention to loan guarantees in sectors like aluminum production
and steel manufacturing, the website said, highlighting two industries suffering from overcapacity in China.