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.

China’s looming NPL crisis

China’s banks are lending a hand to support the government’s efforts to stimulate the economy. But do they risk losing an arm and a leg if the economy fails to grow as expected? Sudip Roy reports from Beijing.

Sub-prime, China style
Chinese banking: The search for fees
China Life toughs out volatile markets
Zhu Min, Bank of China: What China’s banks have learned from the crisis

LEVERAGE IS BACK – at least in China. In just the first two months of the year, China’s banks advanced a mind-boggling Rmb2.7 trillion ($390 billion) of new loans. That amounts to more than 10% of China’s GDP.

The banks aren’t finished yet. Prime minister Wen Jiabao has set a new loan growth target of Rmb5 trillion for 2009 to support his government’s Rmb4 trillion economic stimulus package, which was announced last November. It’s enough to make the west’s leaders cast an envious eye towards Beijing as they struggle to encourage their banks to increase new loans.

The lending spree in China, however, has reignited concerns about an issue that has wrecked the country’s banks in the past: bad debt. Although no one believes China will see the non-performing loan levels of 2003, when they reached 20.4% of total loans or 16.5% of GDP, concern is mounting among some analysts that its banks could experience another bout of credit defaults, especially if the economy continues to slow.

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.


Unlimited access to and

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


Unlimited access to and, 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


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