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China’s top banking regulator warns of Terrible debt, local real estate bubbles

Please try another search Economy1 hour ago (Jun 10, 2021 01:16AM ET) © Reuters. FILE PHOTO: People walk at the Beijing’s central business district (CBD), on the day of the opening session of the National People’s Congress (NPC) in Beijing, China March 5, 2021. REUTERS/Tingshu Wang SHANGHAI (Reuters) – China’s top banking and insurance regulator…


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Economy1 hour ago (Jun 10, 2021 01: 16AM ET)

China's top banking regulator warns of bad debt, local real estate bubbles© Reuters. FILE PHOTO: People walk at the Beijing’s central business district (CBD), on the afternoon of the opening session of the National People’s Congress (NPC) in Beijing, China March 5, 2021. REUTERS/Tingshu Wang

SHANGHAI (Reuters) – China’s leading banking and insurance agent said banks must guard against a increase in non-performing assets, as the nation rolls back a few of their relief measures implemented during the pandemic to aid companies withstand the fallout.

In 2020, the central bank encouraged financial institutions to lower rates for virus-stricken firms and extend payment obligations, among other steps, to give borrowers a breathing space during the coronavirus catastrophe.

“The default rate for some large and medium-sized enterprises has risen, and the credit risks at banking institutions has intensified,” Guo Shuqing told a financial forum in Shanghai via a video message.

He explained a growing trend of local real estate bubbles remained”serious”.

Corporate bond defaults have climbed sharply in China in the past few years, reaching $14 billion in 2020, according to the Institute of International Finance. Chinese banks extended a listing $3 trillion in new loans in 2020, based on data in the People’s Bank of China.

Investors must also be conscious of potential investment losses on financial derivative products, commodity-linked stocks, and rising Ponzi schemes, Guo explained.

The regulator may also resolutely clean up illegal safety issuance pursuits and fend off the pick-up in shadow banking actions, Guo added.

Commenting on global markets, Guo, who also serves as the Communist Party chief at the central bank, stated that monetary policies in some developed nations are”unprecedentedly loose.”

“These measures have stabilised the market in (the) short-term but require all countries in the world to share responsibility for the negative effects,” he said.

A growth in global inflation has arrived and will last more than a number of the U.S. and European specialists have anticipated, Guo added.

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