China's banks to absorb shocks in 2009, says S&P

Standard and Poor's outlook on China's banking sector is stable. "Major banks are financially positioned to absorb the shocks that are likely to mark 2009, provided the government doesn't interfere too much in their lending processes," the ratings agency says in a report published yesterday. The problems that the sector faces are not of a magnitude that they could lead to a negative ratings change on the major banks, it concludes.

The main policy risk comes from the possibility that the government will meddle in how the banks lend money in order to help stimulate the economy. This ...