Caixin, a Chinese regional news source, reported on June 26 that some banks in the troubled Communist nation are refusing to lend to both businesses and individuals as a "cash crunch" is taking hold. According to anonymous finance professionals cited by the agency, these institutions in China are worried about extending loans if they can't guarantee a steady supply of cash in the near future.
Most troubling is the fact that one of the banks affected, the Industrial and Commercial Bank of China, is one of the country's most prosperous and wide-reaching. An unnamed official said that lending was temporarily suspended and that service could start up as early as July 15.
"All of our loans have been put on hold," the source said in an interview. "There may be some credit line when it comes to July, but it will definitely be used up in a few days."
These revelations will do little to stem the tide of volatility in global markets, as China – considered by many economists to be one of the last engines of strength in the world economy – struggles to keep its financial industry afloat. The nation has been dogged by rumors in recent years about a rising amount of non-performing loans, and the latest disclosures seemingly confirm the notion that China may be facing a liquidity crisis sometime soon.
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