China’s banking regulator warns of bad debt, local real estate bubbles | The Daily Star
12:00 AM, June 11, 2021 / LAST MODIFIED: 12:33 AM, June 11, 2021

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

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.

For all latest news, follow The Daily Star's Google News channel.

"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 US and European experts have expected, Guo added.   

Stay updated on the go with The Daily Star Android & iOS News App. Click here to download it for your device.

Grameenphone:
Type START <space> BR and send SMS it to 22222

Robi:
Type START <space> BR and send SMS it to 2222


Banglalink:
Type START <space> BR and send SMS it to 2225

Leave your comments

Top News

Top News

Top