China to tighten control on fixed-asset investment loans

China is to tighten up supervision of lending for fixed asset investment projects after bank loans surged this year and auditors warned of fund misuse.
Loans of more than five percent of a project's total investment, or greater than 500 million yuan (73.3 million dollars), should be paid to whoever is contracted to do the work, not the borrower, new draft regulations state.
Loan applicants must also show equal or greater investment in the projects and their funds should already be invested, the draft rules, issued Tuesday by the China Banking Regulatory Commission, said.
It was not immediately clear when they would come into force.
The new regulations come as the National Audit Office published a report this week warning of fund misuse related to China's 580-billion-dollar stimulus package, unveiled in November to boost the crisis-battered economy.
Some companies were found placing funds obtained through bill financing into deposits to profit from the interest rate spread, said the report.