The China Banking Regulatory Commission on Tuesday warned that the country's banking system faces increasing risks from bad debt.
In its annual report published on its website, the CBRC said the chances in 2010 of some credit assets forming into substantive risks and losses has increased. It identified unwise lending to local government investment units and real estate sector as the major factors raising concerns.
According to the report, the average non-performing loan, or NPL, ratio at the country's commercial banks fell to 1.58% at the end of 2009, declining 0.84 percentage points from the level at the beginning of the year. The banking sector had outstanding NPLs of 426.5 billion yuan at the end of last year, down from 486.5 billion yuan a year earlier, the report showed.
Loans categorized as losses rose to 55.8 billion yuan from 49.5 billion yuan in the previous year. But, loans categorized as "doubtful," meaning some could turn into losses, amounted to a hefty 201.6 billion yuan.
Despite the NPL ratio remaining low, CBRC Chairman Liu Mingkang, said some credit assets could turn into losses this year. "Domestically, the soundness of the banking sector is being tested by increased pressure for an NPL rebound. There are risks associated with lending to local government financing platforms, the real estate sector and industries with excess capacity," Xinhua News Agency quoted Liu as saying in the report.
Liu added that trade protectionism, sovereign debt crises and high unemployment rates would be the new challenges for the world economy.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.