China’s banking sector needs to accept the fact that it is facing a reckoning after years of stimulus-fuelled growth, according to Yu Xuejun, a senior official at the China Banking and Insurance Regulatory Commission.
The number of non-performing loans in China is likely to surge in the coming months as the US Federal Reserve continues to tighten its monetary policy and the US-China trade war continues to put downward pressure on the yuan, Yu said in a speech at a financial forum in Beijing on Thursday.
However, Yu made clear that the government will not sanction another large expansion in credit to help banks through the coming turbulence, according to the South China Morning Post.
“The previous large increase in bank credit already poses an overhanging risk [to the Chinese economy] and the external monetary environment has obviously changed,” Yu told the forum.
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