China Remains Taiwan's No. 1 Debtor in Q1

Lending extended by Taiwan's domestic banks to China, on a direct risk basis, reached US$48.85 billion in the first quarter of the year; and on an ultimate risk basis, such loans jumped to US$81.271 billion, both the highest among Taiwan's national debtors, according to the statistics released by the central bank.

A senior official at the central bank indicates that China first became Taiwan's largest debtor in Q4, 2013 and retained its lead in Q1, 2014. The official says that Taiwan's domestic banks' rising exposure to China is mainly due to  increasing bilateral economic & trade exchanges, the recent rapid expansion of Taiwanese banks in China, and the growing transfer of renminbi (RMB)-based deposits of Taiwanese banks to their Chinese counterparts, such as Bank of China and Bank of Communications.

After Taiwan began allowing domestic banking units of Taiwanese banks to conduct RMB-denominated transactions in early February 2013, cross-strait financial exchanges have been rising to boost business activities for both parties, market observers say.

In the same quarter Luxembourg ranked as the second largest debtor to Taiwan on both direct and ultimate risk basis, followed by the U.S., Hong Kong, and West Indies UK. (JL)

Taiwan's Top-5 Debtor Nations in Q1                                              Unit: US$B.
Rank	Debtor	Debt (direct risk)	Debt (ultimate risk)
1	China	48.8	81.2
2	Luxembourg	42.1	40.7
3	U.S.	29.5	47.2
4	Hong Kong	29.3	21.7
5	West Indies UK	13.7	7.0

Source: the central bank