In response to the COVID-19 outbreak and its impact on China’s economy, credit growth has accelerated. However, that credit expansion is highly uneven across China’s provinces. More developed coastal provinces have received the lion’s share of new credit, while the northeast has seen only a trickle. Given that China’s recovery has been led by state-owned firms, the large geographic imbalance of credit conditions and the squeeze on private and smaller firms raises concerns about another economic slowdown later this year.
