Jerry Hu, who owns an auto-parts firm in eastern China, was approached in October with a strange request. A loan officer from one of the country’s biggest banks asked him to borrow 5 million yuan ($700,000), deposit the money and repay it next month. The bank even agreed to cover the interest.
“Their managers kept calling me,” said Hu, whose firm in Zhejiang province near Shanghai is a valued client because of its steady cash flow and solid profits. “I didn’t really need a loan, but I still agreed to help.”
China Banks Issue Phantom Loans to Hit Targets in Slow Economy
