China Crackdown Drives Business Off the Books

http://www.rfa.org/english/commentaries/energy_watch/estimates-02172014165455.html



A Chinese worker labors on a production line at a steel plant of Dongbei Special Steel Group Co., Ltd. in Dalian city, northeast China's Liaoning province, Jan. 30, 2014.

China Crackdown Drives Business Off the Books
An analysis by Michael Lelyveld
2014-02-17

The accuracy of China's economic estimates faces growing doubts as the government tries to cut industrial overcapacity, recent reports suggest.

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Government-imposed lending limits on state-owned banks have been pushing targeted industries to rely increasingly on unregulated shadow banking, according to The Wall Street Journal and The New York Times.

Shadow banking loans, which also back local government debt, soared 43 percent last year to over 5.1 trillion yuan (U.S $851.7 billion), the Journal reported, citing estimates from the People's Bank of China (PBOC).

The result may be more unrecorded business activity, making it even harder to get reliable readings on China's economy after a series of contradictory signals.