Flood of bank loans

While central banks in developed countries are still worrying about whether "quantitative easing" is effective in persuading domestic banks to lend, for Chinese banking authorities the urgent issue is to be prepared for a dangerous flood of excessive liquidity.

To the surprise of all, China's new lending rose again in June to 1.53 trillion yuan ($224 billion), bringing the total lending this year to 7.4 trillion yuan in spite of the central government's initial full-year target of 5 trillion yuan.

When China's new lending jumped by a jaw-dropping 4.58 trillion yuan ($670 billion) in the first quarter, many believed that, as a counter-crisis measure, such a credit boom was justified as the economy saw only a 6.1 percent growth in GDP, the slowest in about a decade.