Chinese lending slumps, world watches with baited breath

PROTIP: You want the graph to have less of those big changes and more of the little ones.

From Christopher Balding:

From 2008 to 2009 new local currency loans rose from 3.48 trillion rmb to 10.32 trillion according to the PBOC for an annualized increase of nearly 300%.  If economic history tells us anything about rapid increases in credit, it implies that those loans should start going bad in the very near future. 

This is a really impressive graphic that shows the massive spike in government lending in the crisis, a result of the government ordering banks to lend more to help prop up the economy. This was taken by Western writers to be a great strength of the Chinese system, that central financial regulators had such immense power. Great quote from a Forbes editorial from 2009:

Chinese officials essentially forced the banks to lend to support the stimulus program. So state enterprises were forced to borrow. China Aviation Industry Corp., for instance, had to borrow $49.2 billion from 12 Chinese banks this spring. Its general manager, Lin Zuoming, complained in April that he did not know what to do with all the cash. 

We see now that an increase of almost 300% in one year may have had a backlash following it. Are we going to see rolling defaults coming soon as debt cannot be rolled over or extended in these tighter credit conditions? I'm excited to watch.