China's top banking regulator warns of bad debt, local real estate bubbles

Reuters2021-06-10

SHANGHAI, June 10 (Reuters) - China's top banking and insurance regulator said banks should guard against a rise in non-performing assets, as the country rolls back some of the relief measures implemented during the pandemic to help firms withstand the fallout.

In 2020, the central bank encouraged financial institutions to lower rates for virus-stricken firms and extend payment deadlines, among other measures, to give borrowers some breathing space during the coronavirus crisis.

"The default rate for some large and medium-sized enterprises has risen, and the credit risks at banking institutions has intensified," Guo Shuqing told a financial forum in Shanghai via a video message.

He said a growing trend of local real estate bubbles remained "serious".

Corporate bond defaults have risen sharply in China in recent years, reaching $14 billion in 2020, according to the Institute of International Finance. Chinese banks extended a record $3 trillion in new loans in 2020, according to data from the People's Bank of China.

Investors should also be aware of potential investment losses on financial derivative products, commodity-linked futures, and rising Ponzi schemes, Guo said.

The regulator will also resolutely clean up illegal security issuance activities and fend off the pick-up in shadow banking activities, Guo added.

Commenting on global markets, Guo, who also serves as the Communist Party chief at the central bank, said that monetary policies in some developed countries are "unprecedentedly loose."

"These measures have stabilised the market in (the) short-term but require all countries in the world to share responsibility for the negative effects," he said.

A rise in global inflation has arrived and may last longer than some of the U.S. and European experts have expected, Guo added.

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Comments

  • Zhengxi
    2021-06-10
    Zhengxi
    Good
  • SSVC
    2021-06-10
    SSVC
    Mmm.. Appreciate your response and comments Thanks 
  • erichosk
    2021-06-10
    erichosk
    It is good that China is deleveraging while the US is leveraging.  This will avoid getting slaughtered by the US when it starts to deleverage.
    • erichosk
      that's why the US needs others to leverage so that it can dispose its junks.
    • Kelvin_Qiu
      but by then everyone is holding some form of rubbish debt by the US?
  • Monnie13
    2021-06-10
    Monnie13
    Like n comment 
  • dandan_4896
    2021-06-10
    dandan_4896
    Piak piak to the moon with me :)
  • LeeWan
    2021-06-10
    LeeWan
    Like and comment 
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