Battling to Bring China's Bad Loans Under Control

October 09, 2019 | BY

Marilyn Romero

Bad loans in China's banking system have increased in the second quarter of this year even as the government tries to avert a possible debt crisis among the country's smaller banks

Hengfeng Bank, Shanghai China.

Despite its ongoing efforts to rein in irresponsible credit, non-performing loans in China's banking system increased to Rmb2.235 trillion, or $316.6 billion, in the April-June quarter this year, according to the China Banking and Insurance Regulatory Commission, or CBIRC. The figure was 3.6% higher than the Rmb78.1 billion recorded in the first quarter. Provisioning for loan losses also rose to Rmb4.26 trillion at the end of June, up 3% from the end of March, according to data from the CBIRC.

The figures are not surprising to market watchers. The year-long U.S.-China trade war, still with no end in sight, has hit the country's economy hard.

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