18.9 C
Athens
Σάββατο, 23 Νοεμβρίου, 2024

China’s smaller, regional banks have never been safe but they are now falling to pieces due to economic slowdown

Περισσότερα Νέα

- Advertisement -

The banking crisis in China’s Henan province could just be the tip of the iceberg. The crisis has been brewing for years especially in the country’s smaller, rural lenders, which have typically remained outside the regulatory spotlight. These lenders, often fuelling shadow banking, have been piling up bad debts but challenges multiplied after Covid 19 pandemic hit the country’s economic growth.

The smaller, regional banks have played a crucial role in boosting China’s economy. But the deepening economic slowdown in the country, since the middle of the last year, is no more enough to provide the required cushion to the banking system. To add to this, the crumbling of the real estate sector, which has been one of the main drivers of growth in China and the subsequent zero Covid approach have severely ravaged the economy.

“The troubles at some village banks ought to be a wake-up call for more effective regulatory oversight of these banks, which tend to compete for deposits with higher-than-average returns; however, they might fail to repay deposits amid economic headwinds, Yi Xianrong, a professor of economics at Qingdao University was quoted by Beijing based Global Times as saying.

In April, lakhs of people were hit when several rural banks including Yuzhou Xinminsheng Village Bank, Zhecheng Huanghuai Community Bank, Shangcai Huimin County Bank and New Oriental Country Bank of Kaifeng froze withdrawals of deposits.

Minxin Pei, Professor, Claremont McKenna College wrote in an article in Nikkei Asia titled ‘China’s debt bomb looks ready to explode’, that the confidence in the safety of Chinese banks has been badly shaken by the failure of several small banks in Henan Province in April this year.

- Advertisement -

“Though the problem has existed, in fact got bigger, nobody took note of it as China’s massive economic growth was enough to absorb the shock but no more. The pandemic has hit the economy and subsequently the crumbling of the real estate sector has dealt a severe blow,” an analyst told India Narrative.

The fear among many is that the current banking crisis could be a precursor. However, the analyst added that there is no need to press the alarm button. “The regulators in the country are efficient and they will act to ensure that the crisis is arrested,” he said.

According to reports, there are about 4,000 small and medium-sized banks in China—more than 2,190 categorised as rural credit cooperatives, and 1,651 village banks. These banks manage assets worth 92 trillion yuan – almost 30 per cent of the total.

- Advertisement -

ΑΠΑΝΤΗΣΤΕ

εισάγετε το σχόλιό σας!
παρακαλώ εισάγετε το όνομά σας εδώ

The reCAPTCHA verification period has expired. Please reload the page.

Ροή ειδήσεων

ΣΧΕΤΙΚΑ ΑΡΘΡΑ

Fatwa against VPNs: A threat to digital freedom in Pakistan

In a rapidly evolving digital world, where technology is increasingly integrated into every aspect of our lives, the internet is often viewed as a...

Strikes and protests increase in China due to unpaid wages and factory closures

Strikes and protests by labourers and industry workers have seen arise in China where such incidences are strictly forbidden. The majority of the protests...

Pakistan: HRCP demands reversal of Anti-Terrorism Act amendment proposal, warns of threats to democracy

The Human Rights Commission of Pakistan (HRCP) concluded its 38th Annual General Meeting with a stern call for urgent action to address Pakistan’s worsening...

China’s space ambitions face ‘huge test’ from Musk presence in Trump White House

Tech mogul Elon Musk's potential weight in the second Donald Trump administration is likely to accelerate the US space programme and pose a "huge test" to China's extraterrestrial...

ΔΗΜΟΦΙΛΗ ΑΡΘΡΑ

Φέτβα κατά των VPN: Μια απειλή για την ψηφιακή ελευθερία στο Πακιστάν

Σε έναν ταχέως εξελισσόμενο ψηφιακό κόσμο, όπου η τεχνολογία ενσωματώνεται ολοένα και περισσότερο σε κάθε πτυχή της ζωής μας, το Διαδίκτυο θεωρείται συχνά ως...

Fatwa against VPNs: A threat to digital freedom in Pakistan

In a rapidly evolving digital world, where technology is increasingly integrated into every aspect of our lives, the internet is often viewed as a...

Σε κίνδυνο τα ανθρώπινα δικαιώματα στο Πακιστάν

Η Επιτροπή Ανθρωπίνων Δικαιωμάτων του Πακιστάν (HRCP) ολοκλήρωσε την 38η Ετήσια Γενική Συνέλευση με μια αυστηρή έκκληση για επείγουσα δράση για την αντιμετώπιση της...

Οι απεργίες και οι διαδηλώσεις αυξάνονται στην Κίνα λόγω των απλήρωτων μισθών και του κλεισίματος των εργοστασίων

Απεργίες και διαμαρτυρίες από εργάτες και εργάτες της βιομηχανίας έχουν εμφανιστεί στην Κίνα όπου τέτοια περιστατικά απαγορεύονται αυστηρά. Η πλειονότητα των διαμαρτυριών διεξήχθη πριν...