What has China learned from the 2008 global financial crisis? Unlike banks in most other countries, Chinese banks went on a lending binge in 2009 and 2010, increasing loans by almost 60%, or Rmb18,900bn ($2920bn). Beijing was determined to maintain high economic growth and has done precisely that, with the World Bank forecasting 9.3% growth in gross domestic product in 2011. But China closely watched the impact of the crisis and did not believe its lending boom could last for ever. And so, over the past six months or more, the country has entered a phase of tightening with stricter banking requirements, very much aware of the dangers of excessive leverage that banks in the West overlooked.
China needs to adopt a "cautious macroeconomic framework" and should require financial institutions to boost their stores of capital, People’s Bank of China governor Zhou Xiaochuan said in a speech at the Lujiazui Forum in Shanghai in May. Large, systemically important banks especially should be subject to higher capital requirements, he added.
