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Wan LixinOpinion deputy editor of Shanghai Daily
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Regulator says banking sector exposure limited
By Zhang Fengming |
February 27, 2009, Friday
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Print Edition
Print Edition
THE country's banking industry has experienced only limited exposure to the global financial meltdown, the top regulator said yesterday. Despite the huge expansion in lending this year, China will also prevent swinging back to a state where its banks hold large amounts of bad debt on their books, said Liu Mingkang, chairman of the China Banking Regulatory Commission.
Chinese banks have been rapidly increasing their lending since November as the authorities scrapped the loan quota, cut interest rates, loosened reserve requirements and eased monetary policy to stimulate economy growth.
Liu said the continued rapid growth of loans is fundamentally sound against a broader picture of a stable nationwide banking system.
"The global financial crisis has had a limited impact on China's banking industry and the risks are under control," Liu said, without elaborating on how authorities will prevent an escalation of bad loans.
Banks extended a record 1.62 trillion yuan (US$237 billion) of new local-currency loans in January.
"The strong lending growth is somewhat of a miracle when most banks in other markets are reluctant to extend credit," said Yang Qingli, a BOCOM International analyst, yesterday. "The rapid expansion of credit is a good way to revive economic growth, but it is coupled with concerns about the quality of some of the loans."
Chinese banks have for years endeavored to shed the burden of bad loans and move ahead as commercial players following market rules rather than blindly following state instructions.
Chinese banks have been rapidly increasing their lending since November as the authorities scrapped the loan quota, cut interest rates, loosened reserve requirements and eased monetary policy to stimulate economy growth.
Liu said the continued rapid growth of loans is fundamentally sound against a broader picture of a stable nationwide banking system.
"The global financial crisis has had a limited impact on China's banking industry and the risks are under control," Liu said, without elaborating on how authorities will prevent an escalation of bad loans.
Banks extended a record 1.62 trillion yuan (US$237 billion) of new local-currency loans in January.
"The strong lending growth is somewhat of a miracle when most banks in other markets are reluctant to extend credit," said Yang Qingli, a BOCOM International analyst, yesterday. "The rapid expansion of credit is a good way to revive economic growth, but it is coupled with concerns about the quality of some of the loans."
Chinese banks have for years endeavored to shed the burden of bad loans and move ahead as commercial players following market rules rather than blindly following state instructions.
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