Lending to China by international banks hit a new high in the first half of 2017, as Beijing’s deleveraging drive led to tighter domestic credit conditions, pushing corporate borrowers offshore.

Foreign banks can typically charge higher interest rates on loans to Chinese borrowers than to those in their home markets, boosting the banks’ profits. But increased exposure to China also carries risks, as economists warn that extraordinary debt growth since 2008 is likely to produce rising defaults.

“Expansion into China will support Hong Kong banks’ margins but could also expose risks. An increase in China exposure without adequate controls and capital buffers could?.?.?.?be negative for banks’ ratings,” Sabine Bauer, senior director for financial institutions at Fitch Ratings in Hong Kong, wrote in a report.