HKMA warns on US dollar funding risk from China corporate lending
Hong Kong branches of Chinese commercial banks are increasingly lending US dollars to state-backed enterprises. The surge in dollar demand from Chinese corporates comes as lending is squeezed onshore by Beijing's efforts to limit the credit growth of banks.
The Hong Kong Monetary Authority (HKMA) has issued a warning about increasing funding and liquidity risks linked with the upsurge in US dollar lending being made by Hong Kong branches of leading Chinese commercial banks to state-backed enterprises with offshore operations. This lending rose by 47% last year, or HK$440 billion ($56.6 billion), according to the Hong Kong central bank.
The rapid increase in credit growth, which the HKMA highlighted in a circular sent to the city's banks this week
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