Banking Problems Crop Up In China

Although the financial news focus has been on the so-called stress-testing of European banks – tests which have been too easy for comfort -- the bigger news is surely the admission by China of the loan loss potential of its banks. The China Banking Regulatory Commission said that as much as 20 percent of 7.7 trillion yuan loans to regional government entities could become non-performing. These were mostly for infrastructure and building projects many of dubious commercial value and comprised the lion's share of new lending last year of 9.6 trillion yuan.

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