Inst

China: Credit Is Contracting Rapidly

Anecdotal (apocryphal?) story:

In China, there is lending up and down the supply chain. The supplier to this and that company uses an informal loan to delay payment for goods and services on time. What happened with the recent export bust was that since the decrease in export orders decreased the amount of capital available, this informal lending system started seizing up, as companies were no longer able to loan each other money for payment.