Will the Chinese banking system be reformed or collapse?

Moody''s analyst Wei Yen discusses the outlook for the Chinese banking sector.

How serious is China about overhauling the banking system

At the beginning of the reform process, China was very big on overhauling the SOEs, but now the emphasis seems to have very definitely turned to the banks. The first tangible step came in 1999 when the government disposed of a huge chunk of legacy through four AMCs Asset Management Companies set up under the four state-owned banks. These NPLs, amounting to Rmb1.4 trillion, all related to pre-1995 loans when bank lending had been completely state-directed. At that point, the banks kept two types of NPLs on their books - those that had been were generated through their own mistakes post 1995...

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