Last year margin lending grew by 196%
Last year margin lending grew by 196% and in the first weeks of 2015 jumped by another 9%, bringing the total balance of these transactions reached 1.1 trillion. yuan (177 billion. dollars). However, only in December entrusted loans increased by 458 billion. Yuan. Local governments and companies in China multiplied its debt in recent years to fund infrastructure projects and the expansion of their businesses. Increased use of loans from individuals, however, poses great dangers as changes in market trends small investors dominating stock markets in the country will face huge losses.
"The government wants to keep under control, margin financing and risks of debt. Once the market has grown so much in the last three months significantly increased the pressure for short-term realization of profits", told the Wall Street Journal Carolyn Mauer, a fund manager at Henderson Global Investors.
These market turmoil came only days before being announced details of China's economic growth for the entire 2014 Most analysts expect GDP to have risen by 7.2%, which would be the worst result in 24 years. "The statistics may deteriorate further negative sentiment in the market," warns Ksefeng Chao, an analyst at Huaxi Securities.
China is actively pursuing the development of alternative sources of energy. China has a huge reserve of coal and Chinese policy makers are now focusing on making the best use of its coal mines. A massive initiative has been taken to extract gas from coal. If this project can become successful then many Chinese cars would run with gas instead of oil. Gas extracted from coal will also work as source of energy for the power plants. Another option is hydro electricity and China is aggressively pushing it. Almost all the major rivers of Asia have originated in China. However, this plan can face stiff resistance from other countries who are in downstream.