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. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Banking

IMF: Domestic risks to China’s financial system four-fold

The International Monetary Fund reveals potential risks that could shake-up China’s financial system, despite improvements to financial market structure and transparency

The International Monetary Fund (IMF) has unveiled risks faced by China’s financial system, after its huge growth, increased globalisation and activities in shadow banking.

The IMF’s latest report People’s Republic of China: Financial System Stability Assessment states that the main near-term domestic risks to the financial system are four-fold, despite the “remarkable progress” the country has made in terms of its transition towards greater transparency, structure, performance and oversight of financial institutions.

“Despite reform and financial strength, China confronts a steady build-up of financial sector vulnerabilities,” says the IMF report. “The system is becoming more complex and interlinkages between markets, institutions and across international borders are growing. In addition, informal credit markets, conglomerate structures and off-balance sheet activities are on the rise.

“Furthermore, the growth model, the associated and relatively inflexible macroeconomic policy framework, and the government’s important role in credit allocation at the central and provincial levels are leading to a build-up of contingent liabilities. These could affect the needed reorientation toward domestic demand and new sectors of growth. These vulnerabilities are not easily quantified, however, in part due to limitations on monitoring, data collection and inter-agency information exchange.”

The report was based on information available at the time of its completion on June 24.

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 access 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

£73.75 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