The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.
Banking

China's banks must reassess local goverment lending risks

China's most senior banking regulator has told the country's banks to submit reports about their lending to local government amid concerns that the industry faces a looming bad debt crisis.

Liu Mingkang, chairman of the China Banking Regulatory Commission told an Asian economic forum over the weekend that banks must reassess their loans on "a project-by-project" basis.

"By the end of this coming June, all of the banks are required to submit comprehensive reassessment reports to us about that area's exposure," he said.

His comments come as fears mount that China's $600 billion stimulus package that has kept the economy powering ahead despite the global economic crisis has led to reckless investment decisions through off-balance sheet financing vehicles. About three-quarters of the stimulus package has been disbursed to these vehicles financing infrastructure projects and real estate developments. Some analysts believe that these investments could end up generating at least $90 billion in new non-performing loans leading to a banking bailout and the bankruptcy of hundreds of indebted municipal authorities.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of acces below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£68.33 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree