Smaller firms feel tightening squeeze

China’s attempts to rein in off-balance-sheet lending by banks have compounded the difficulties faced by smaller firms that were already cut off from formal credit channels. Net new bank lending last quarter was little changed from a year ago but the total amount of finance extended under the broader definition that the People’s Bank uses fell by nearly a third. Officials have reasserted their control over total credit growth, at least for a while, but at the cost of pushing more borrowers into the arms of unregulated underground lenders.