Near the top of the list in the IMF study scrutinising the stability of China’s financial system is the need for banks to increase their capital to ward off risks from mounting debt. China should “incite local governments to strengthen supervision on risks”, she said. The ballooning debt – estimated at 234 per cent of gross domestic product by the IMF – adds financial risk and may weigh on China’s future economic growth. It added that 27 out of 33 banks tested, accounting for three-quarters of China’s banking system assets, were “undercapitalised relative to at least one of the minimum requirements”. They will “strengthen management of liquidity risk for banks and protect the safety and stability of the banking system”, the commission said.

Source: The Express Tribune December 07, 2017 06:45 UTC