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China: Banks play down financial risks

Senior bankers in China remain confident that the economy will continue to provide a favourable backdrop for the banking industry, despite a slowdown in growth. However, some concede that a more complex economic environment in China and abroad will bring greater challenges to the banking system, especially in risk management.

Qian Wenhui, executive director and executive vice-president at Bank of Communications, says: "China is [likely] to face a slowdown to a certain degree," although he still estimates that "this year’s GDP will retain a growth rate of 10% or so, maintaining the momentum of the rapid development of recent years".

Qian’s comments come as stories emerge in the local press that the government is planning a stimulus package of Rmb370 billion ($54 billion) through a mixture of state spending and tax cuts amid fears, according to Michael Pettis, a former Bear Stearns trader and now an academic in Beijing, that the economy might be weakening, as opposed to growth merely slowing.

Negative impact

Even some of China’s most senior officials accept that the outlook for the economy is poor. "Negative impact on the economy will continue," said Zhu Zhixin, vice-minister of the National Development and Reform Commission, in a press conference last month.

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